Wedbush Morgan Upgrades Neutral Tandem (TNDM) to Buy

June 18, 2009 10:14 AM EDT

Wedbush Morgan upgrades Neutral Tandem (Nasdaq: TNDM) from Hold to Buy. Maintains estimates and $32 price target.

Wedbush analyst says, "Upgrading to BUY from HOLD, as we believe attractive valuation, robust growth, and solid visibility trump potential risks associated with carrier consolidation. With shares off 15% since our recent initiation and trading in-line with its peers despite superior growth, we are buyers at current levels...Concerns over discussions and rumors of carrier consolidation, more than reflected in share price. Recently, the WSJ indicated Level 3 (Nasdaq: LVLT) and Sprint (NYSE: S) were in talks for a long distance JV. Our checks indicate talks are very early and that control could be an issue. While we do not view this likely, we believe some investors fear a potential JV could block Sprint LD from becoming an LD customer, we estimate Sprint has 10-15% of the LD market. Neutral Tandem (NT) indicated it expects revenue from long distance (IXCs/Interexchange Carriers) to be 20% in a couple years. We also believe off and on rumors of a T-Mobile/Sprint merger do not make sense near term given technology differences (GSM, CDMA, iDEN), which has caused Sprint problems."

To see more analyst ratings on TNDM Click Here.

Neutral Tandem, Inc. is a provider of tandem interconnection services to competitive carriers, including wireless, wireline, cable and broadband telephony companies.

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