Dycom Industries (DY): Buy Into Earnings - FBR
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FBR Capital analyst, Alex Rygiel, reiterated his Outperform rating on shares of Dycom Industries (NYSE: DY) and suggests taking a position ahead of earnings in late November.
The analyst believes leading indicators suggest strong results relative to expectations. DY's top four customers, which accounted for 64% of DY's F2016 revenue, grew their combined 3Q16 capex by 9% sequentially, which should provide upside to the assumption that they will be down 6% sequentially.
Corning (GLW) also witnessed strong demand in fiber to the home market in North America and expects this positive trend to continue which the analyst considers to be another leading indicator. This is in stark contrast to the recent 25% decline in DY stock over the past several weeks after news coming out of a 3.6% customer in F4Q16 suggesting a pause in their fiber deployment strategy in markets where the company has not officially launched or is not currently under construction. We believe this decline is completely unwarranted and that investors are missing the positive data points of the majority.
No change to the price target of $121; 10x FY17 EV/EBITDA.
Shares of closed at $76.93 yesterday.
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