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UPDATE: Morgan Stanley Upgrades Frontier Communications (FYBR) to Equalweight

May 26, 2022 3:10 AM EDT
Get Alerts FYBR Hot Sheet
Price: $26.64 +2.46%

Rating Summary:
    9 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 53 | New: 12
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(Updated - May 26, 2022 4:01 AM EDT)

Morgan Stanley analyst Simon Flannery upgraded Frontier Communications (NASDAQ: FYBR) from Underweight to Equalweight with a price target of $25.00 (from $24.00).

The analyst comments "The primary drivers for our underweight thesis for frontier were 1) valuation representing a substantial premium to peers 2) an estimated $3B in funding needed for the fiber build and 3) execution risks from a fiber build perspective. On the first point the stock is down ~17% YTD trading at a 6.5x EBITDA multiple (using 2023 numbers) which we view as more appropriate in the context of how we think about valuation for wireline and cable companies. On the funding point, we do still see needs for capital down the line but the recent $1.2B debt raise does plug some of this gap giving the company runway until mid-2024. Lastly, from a fiber build perspective the company has shown strong results with broadband adds ahead of our expectations for two quarters now as build costs continue to be in-line with management's expectations so far. With the valuation reset, near-term funding needs addressed and the fiber build going according to plan so far we see less risks in this situation and move to Equal-weight. The stock is currently trading approximately in-line with our new Price Target; the Bull/Bear skew is wide here but also relatively balanced."

For an analyst ratings summary and ratings history on Frontier Communications click here. For more ratings news on Frontier Communications click here.

Shares of Frontier Communications closed at $24.64 yesterday.


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