Oppenheimer on Communications and Cloud Services (AAPL, CMCSA, CCI, T, VZ, AKAM, EQIX, RAX, TWTC)

August 13, 2012 9:45 AM EDT
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Oppenheimer on Communications and Cloud Services

Analyst, Timothy Horan, said, "Second-quarter results were solid, especially for wireless and cloud service companies, which has driven strong sector stock performance, which we expect to continue. We see a secular shift in demand coming from LTE which should drive further cloud and wireline broadband demand. We still see the tower stocks and cable as undervalued, as we discuss in our full report, dated 8/12/12. The timing of the iPhone (Nasdaq: AAPL) launch could play a major part in determining when sector shares dip once again; however, we expect strong stock performance into year-end."

"We also believe that our top two recommendations, Comcast (Nasdaq: CMCSA)(Nasdaq: CMCSK)and Crown Castle (NYSE: CCI), will benefit from strong results in the second half of the year, and we see both stocks as still inexpensive on a free cash flow yield to growth basis."

"Lower end wireless carriers lost share to AT&T (NYSE: T) but mostly to Verizon (NYSE: VZ), and we expect this trend to continue for a number of reasons. We continue to believe that the four smaller wireless players will eventually consolidate to gain economies of scale in order to more effectively compete."

CMCSK, CCI, T, and VZ all rated Outperform

On Cloud computing, Oppenheimer comments on four companies:

Akamai (Nasdaq: AKAM): Mgmt is optimistic about trends and has some visibility in the business. Raised guidance.

Equinix (Nasdaq: EQIX): Mgmt noted very strong bookings and global net booking activity is ahead of plan YTD. Raised guidance.

Rackspace (Nasdaq: RAX): Cautious about the next few quarters as enterprise customers are looking to see history of performance metrics on OpenStack before committing, but on track to reach ambitious full year goals, including cap-ex.

Time Warner Cable (Nasdaq: TWTC): Very optimistic. Continued strengthening of sales cycle as year progressed. Not seeing impact of macroeconomy.

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Analyst Comments


David McVoy on 2012-10-09 13:07:05
Mark as Spam | Reply to this comment

I really trust something that doesn't know the difference between TWTC and Time Warner Cable.

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