UPDATE: FBR Capital Downgrades Zayo Group Holdings (ZAYO) at Underperform

FBR Capital downgraded Zayo Group Holdings (NYSE: ZAYO) from Market Perform Underperform rating and a price target of $25.00 (from $30.00) amid weak organic outlook.

Analyst David Dixon commented, "We downgrade ZAYO to Underperform and lower our price target from $30 to $25. The lack of an enterprise sales force is a concern; and, despite synergy potential between ELI and Allstream, revenue at ZAYO Canada remains weak, and the business may need to restructure. Our checks indicate that, similarly to the decision by TELUS to build, versus buy, fiber from ZAYO in Canada, VZ's issuance of a 20- to 30-city, two-year, fiber RFP buildout may affect ZAYO's potential revenue opportunity and may provoke competitive fiber responses from cable companies. We see these as significant headwinds against ZAYO's achieving $3M in net installs organically. We think the company will rely more on M&A to drive long-term growth, as the organic business does not appear to be able to sustain the momentum it has enjoyed over the last few years."

For an analyst ratings summary and ratings history on Zayo Group Holdings click here. For more ratings news on Zayo Group Holdings click here.

Shares of Zayo Group Holdings closed at $30.79 yesterday.

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