FBR Capital Downgrades Shenandoah Telecommunications (SHEN) to Market Perform
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FBR Capital downgraded Shenandoah Telecommunications (NASDAQ: SHEN) from Outperform to Market Perform with a price target of $35.00 (from $31.00).
Analyst David Dixon commented, "We downgrade SHEN to Market Perform but raise our price target, from $31 to $35, based on our revised sum-of-the-parts valuation. The 2Q results included approximately eight weeks of NTLS (following the deal's close on May 6, 2016) but, importantly, did not include all revenues from Sprint customers and wholesale customers in the NTLS region after closing, due to billing-cycle differences. Integration of the NTLS region is tracking well; the rate of net subscriber losses in both prepaid and postpaid segments of the NTLS region should improve going forward. We also expect the ARPU differential between the NTLS and legacy SHEN service areas to improve going forward since the product and the network story have gotten better. Importantly, we believe the relationship with Sprint's management also has improved from already strong levels. Sprint has now dedicated additional resources to create further accretive affiliate deal opportunities in adjacent areas, which bodes for SHEN investors, in our view."
Shares of Shenandoah Telecommunications closed at $33.78 yesterday.
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