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Jefferies Starts Lumos Networks (LMOS) at Buy

April 24, 2013 8:59 AM EDT Send to a Friend
Get Alerts LMOS Hot Sheet
Price: $14.43 -0.55%

Rating Summary:
    6 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 16 | Down: 14 | New: 38
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Jefferies initiates coverage on Lumos Networks (NASDAQ: LMOS) with a Buy. PT $15.00.

The firm comments, "Spun-off from NTELOS in October 2011, Lumos operates a 5,800 route-mile competitive fiber network in six states – VA, WV, PA, MD, OH, and KY – and has a legacy RLEC business in three rural counties of Virginia. Leveraging its RLEC infrastructure, LMOS has an ‚edge-out‛ strategy for the fiber business where incremental investments are made only on proven customer demand. LMOS has been getting traction in the education, healthcare, financial, and government verticals. It also provides wholesale connectivity to wireline and wireless operators – VZ accounts for ~10% of its revenues; NTLS is the second largest customer, largely for cellular backhaul. LMOS has also invested in a fiberto-the-home initiative that passes 16k homes. In our view, long-term growth will undoubtedly be driven by fiber. In the near-term, LMOS is going through a transition period where the new solutions-oriented sales people have yet to reach optimal productivity levels, capex remains elevated but success-based, and it needs to manage costs without impacting existing cash flows. However, 2013 could be the inflection point; as visibility into the underlying growth improves, we believe there is scope for material multiple expansion. Additionally, in our view, LMOS could be a tuck-in acquisition for an RLEC or a cable MSO."

For an analyst ratings summary and ratings history on Lumos Networks click here. For more ratings news on Lumos Networks click here.

Shares of Lumos Networks closed at $13.51 yesterday.




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