COVD news from Friday
Coming to Covad?s defense
Analyst James Henry of Bear Stearns came to the defense of Covad Communications on Friday, one day after the independent supplier of high-speed ?DSL? Internet service touched yet another 52-week low.
In a report, Henry expressed befuddlement at the stock?s decline - its fallen two-thirds since March 1 - and argued that Covad (COVD: news, msgs) is poised to take off. The analyst reiterated his ?buy? rating and espoused a target of $100 for the stock by year end.
?In conversations with investors during the day, we were unable to unearth an even vaguely credible negative story for the stock,? Henry told clients.
Whatever the case, he says investors are overlooking Covad?s expansion of its digital subscriber line service, which allows high-speed connections over ordinary copper phone lines, to cover 45 percent of all U.S. consumers and businesses by year end.
?With escalating demand for broadband from an increasingly large base of businesses and consumers coupled with a major push from Silicon Valley,? Henry says, ?we believe that Covad is in the right place at the right time with the right set of assets to address one of the greatest market opportunities in the history of communications.?
Pretty strong stuff, but investors aren?t necessarily acting irrational here. It?s increasingly clear that Covad will face stiff competition from all sorts of rivals, including cable carriers, satellite operators and other DSL upstarts, never mind the Baby Bells, which are moving to do battle after getting off to a slow start.
Covad may very well be one of the winners, but it?s still got something to prove before investors come scurrying back. |
