Cowen Cuts Price Target to $62 on Level 3 Communications (LVLT) Following 2Q15 Results

Cowen maintained an Outperform rating on Level 3 Communications (NYSE: LVLT), and cut the price target to $62.00 (from $65.00), following 2Q15 results. LVLT reported revenue at $2.061B vs. the Street's $2.080BE.

Analyst Colby Synesael commented, "LVLT reported 2Q15 rev below consensus but above our estimate and EBITDA in-line with consensus ex a ~$10MM 1x benefit but above our estimate. Investor focus was on N.A. enterprise growth which again decelerated to 7.1% vs. a combined ~11% in 2014 when LVLT/TWTC were for the first ten months being run as separate companies. While mgmt. has messaged many times tough comps including ramping Starbucks/ Federal contracts in 2014 and a moderate slowdown resulting from its February sales force integration, the results nonetheless were worse than expected. While in retrospect we now believe 2014 growth was likely inflated and not a good proxy for future growth, and thus have reduced our outer year N.A. enterprise growth to 9% from previously 10-11%, we believe the company’s business remains very much intact as evidenced by increased Q/Q and Y/Y bookings, an expected Q/Q acceleration in revenue in 2H15, and our continued view that growth will accelerate in 2016. Under a stable to improving revenue picture in 2H15/2016 we believe investor focus should again turn to EBITDA/FCF which we have now increased to be above 2015 guidance and while we have admittedly reduced our outer year estimates we remain well above the Street. We believe yesterday’s sell-off creates a meaningful buying opportunity and are reiterating our Outperform rating."

For an analyst ratings summary and ratings history on Level 3 Communications click here. For more ratings news on Level 3 Communications click here.

Shares of Level 3 Communications closed at $49.39 yesterday.

You May Also Be Interested In

• Citi Upgrades United Microelectronics Corp (2303:TT) (UMC) to Buy 'with limited downside'
• Lockheed Martin (LMT) PT Raised to $487 at Deutsche Bank
• Equity Residential (EQR) PT Raised to $70 at Evercore ISI