UPDATE: Citi Downgrades Consolidated Communications Holdings Inc. (CNSL) to Sell
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Citi analyst Michael Rollins downgraded Consolidated Communications Holdings Inc. (NASDAQ: CNSL) from Neutral to Sell with a price target of $5.00.
The analyst comments "Consolidated is in the early stages of a multi-year fiber upgrade program, which should help support long-term equity value. However, the stock has outperformed some of its wireline pure-play peers and is trading at a meaningful valuation premium. We previously recognized a risk that CNSL could be taken private by its largest shareholder, Searchlight, when CNSL was trading at a lower valuation. As much as we like the strategic direction for CNSL, we are reducing our rating to a Sell/High Risk for a few reasons. First, a premium FV/EBITDA valuation. Second, CNSL is likely to address most of our estimates of its funding need with additional asset-monetization & possible securitization. However, these actions are unlikely to be accretive to equity valuation. Third, consensus 2023 EBITDA for CNSL seems too high relative to our outlook. We could revisit our thesis at a lower valuation, all else being equal."
Shares of Consolidated Communications Holdings Inc. closed at $6.98 yesterday.
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