DJ Morgan Stanley Cuts Time Warner Telecom Views >TWTC
26 Jun 12:50
By Christine Nuzum
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Citing the slowing economy, Morgan Stanley cut its
revenue estimates Tuesday for Time Warner Telecom Inc. (TWTC), a favorite
emerging telecommunications stock.
Analyst Todd Scott now estimates the company's recurring revenue will
increase by 6% each quarter from now through the second quarter of next year.
Previously, Scott had predicted quarterly revenue growth of 10% to 12%.
He maintained his $85 price target and his strong buy rating on the stock.
In a research note, Scott emphasized he remains bullish on the company's
business. Time Warner Telecom is poised to exploit a shortage of metropolitan
bandwidth "that is likely to last for several years," he wrote. He expects the
company's revenue to accelerate as the economy improves.
Even if revenue continues to stagnate, the stock is undervalued, he wrote.
"Importantly, even if we assume that the company's revenue growth never
recovers, our analysis still results in a $45 to $50 price target," he said.
"This price target assumes that quarterly revenue growth declines to 6% and
then slows from there."
Morgan Stanley was the lead underwriter in Time Warner Telecom's 1999 initial
public offering and in a convertible offering earlier this year.
However, Time Warner Telecom was a top pick for Scott when he covered telecom
at Donaldson, Lufkin & Jenrette. He joined Morgan Stanley in October.
Scott also initiated coverage of MPower Communications Corp. (MPWR) and
Pac-West Telecomm Inc. (PACW) with neutral ratings. He lowered his price target
on shares of ITC Deltacom Inc. (ITCD) to $10 from $12. He maintained his
neutral rating on McLeodUSA Inc. (MCLD), while expressing confidence in the
company's guidance.
-By Christine Nuzum, Dow Jones Newswires; 201-938-5172
(END) DOW JONES NEWS 06-26-01
12:50 PM |
