RESEARCH ALERT-Prudential starts telecom companies
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NEW YORK, May 24 (Reuters) - Prudential Securities said on
Thursday that it has started coverage of the telecommunications
industry, rating three regional bell companies with strong buy
ratings and long distance carriers with hold ratings.
Verizon Communications Inc. , BellSouth Corp.
, and SBC Communications Inc. all received
strong buy ratings, analyst Floyd Greenwood said in a research
note. Each of them are expected to gain long-distance telephone
business.
AT&T Corp. , WorldCom Inc. , and Sprint Corp.
were all launched with hold ratings, based on continued
pressures in the long-distance business and company specific
issues, Greenwood said.
Greenwood said in a research note that AT&T has a great
deal of uncertainty reflecting a proposed breakup, but the
breakup should lead to a healthier group of companies. AT&T's
target price is $24, compared with a Wednesday close of $20.75
on the New York Stock Exchange.
WorldCom struggled last year with declines in main products
and the end of its strategy of increasingly large acquisitions,
Greenwood said. "We believe WorldCom is on the right track, but
it will take time for its strategy to mature," Greenwood said
in a research note. The stock, which closed at $18.59 on
Wednesday, has a $20 price target.
Greenwood set a $22 price target for Sprint shares, which
closed at $20.20 on May 23. "Sprint is in a period of
transition. We believe it is still recovering from its
attempted, but unsuccessful, merger with WorldCom," Greenwood
said in a statement.
Greenwood said Verizon is well positioned in the market
place and warrants a $75 price target based on the company's
discounted cash flow. Verizon closed at $53.70 on Wednesday.
SBC has been "forward looking and opportunistic" but is
more exposed to operational and market issues than other
regional bells. The strong buy rating is based on the stock's
attractive price, which was $42.81 at Wednesday's close,
Greenwood said.
BellSouth's attractive asset base makes it an possible
takeover candidate, but it has enough strength in its service
area to continue as a stand-alone telecommunications company,
Greenwood said.
Greenwood set a $55 target on BellSouth, which closed at
$41.05 on Wednesday.
REUTERS
Rtr 09:46 05-24-01 |
