UPDATE: Oppenheimer Upgrades CenturyLink, Inc. (CTL) to Outperform
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(Updated - November 8, 2016 9:41 AM EST)
Oppenheimer upgraded CenturyLink, Inc. (NYSE: CTL) from Perform to Outperform with a price target of $30. Analyst Timothy Horan thinks the stock's selloff is overdone.
"We are upgrading CTL to Outperform from Perform with a $30 PT as we believe the sell-off (-24%) in shares after the announcement of the proposed acquisition of LVLT as well as its 3Q earnings is more than overdone. Negative investor sentiment overlooks the positive aspects of combining the two companies, in our view," said Horan.
The analyst added, "Combining the two companies creates the second-largest business enterprise-focused company domestically (#3 globally). 75% of revenue will come from enterprise/wholesale. CTL's proforma dividend payout ratio (based on FCF) will be 2000 bps better at ~ 60%-70%. Importantly, after dividend payments, the company will generate ~ $1.5B in FCF/year, giving optionality to pay down debt or do more M&A (likely in EMEA) to help accelerate growth and shield future taxes."
Shares of CenturyLink, Inc. closed at $23.32 yesterday.
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