DA Davidson Downgraded Global Crossing (GLBC) to Neutral, Cuts Price Target to $27.20

DA Davidson downgraded shares of Global Crossing (Nasdaq: GLBC) to a Neutral rating today, from its previous rating of buy, and cut its price target from $48 to $27.20.

The firm still believes that the company will close its merger with Level 3 Communications (NASDAQ: LVLT) in November. DA Davidson also suspects that the company will have over $300 million in synergies within the next three years after the merger.

Growth in the UK may go negative due to the poor economic conditions in the country right now. The firm notes that growth in the Latin America and the rest of the world will most likely decrease substantially.

DA Davidson reaffirmed its 2011 EPS estimate of ($2.26) but cut its 2012 estimate from ($0.87) to ($1.70). The firm also maintained its 2011 revenue estimate of $2.795 billion, but lowered its 2012 estimate from $3.035 billion to $2.966 billion.

The LVLT's debt to EBITDA ratio is currently at 7.7x on Q2 debt levels of $7.2 billion. DA Davidson suspects that the merger with GLBC will drop the ratio to 5.6x.

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