CenturyLink (CTL) Long-Term Strategy Intact and Dividend Secure, UBS Says

UBS analyst Batya Levi reiterated a Buy rating and $39 price target on CenturyLink, Inc. (NYSE: CTL) saying the long term strategy is intact and the dividend is secure.

Levi commented, "Mgmt spent much of the analyst day reiterating its strategic vision, which includes transitioning CTL into integrated solutions provider of network, cloud, hosting and IT services. Mgmt suggested there was some unexpected wholesale/CPE pressure in 2Q, leading us to believe the full year outlook (which mgmt would not affirm or deny) could be tweaked down on the 2Q call. That said, the sales funnel is building and mgmt. remains confident CTL has the right set of assets to reach revenue stability over time, followed by EBITDA stability 12-18 months thereafter."

It was added, "Mgmt reiterated the dividend is safe despite the inflation in cash taxes/payout next year (UBSe 85%). Post 2016, we estimate the payout will return to comfortable levels (60%+) while underlying business trends stabilize. In light of mgmt commentary, we are lowering 2Q rev/EBITDA estimates by 0.5% and 1.9%, respectively. We are making similar changes to our YE estimates, which now reflect a 1.1% annual fall in revenues and a 3.3% decline in EBITDA."

For an analyst ratings summary and ratings history on CenturyLink, Inc. click here. For more ratings news on CenturyLink, Inc. click here.

Shares of CenturyLink, Inc. closed at $31.88 yesterday.

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