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Technology Stocks : Covad Communications - COVD
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To: Mark Duper who wrote (256)9/3/1999 2:24:00 PM
From: jhg_in_kc  Read Replies (1) of 10485
 
RESEARCH ALERT - Details on Covad [COVD-news] upgrade
NEW YORK, Sept 3 (Reuters) - Deutsche Banc Alex Brown on Friday upgraded Covad Communications Group Inc. [COVD-news] to "strong buy" from buy, citing the company's announcement it would nearly double its network to reach the nation's top 100 markets.

-- said raised the fourth quarter 2000 price target to $90 from $70.

-- said the "upgrade is based on our belief that digital subscriber line (DSL) industry fundamentals are improving and that the company is further solidifying its position as the premier provider to small and medium-sized business customers."

-- After the stock market closed on Thursday, Santa Clara, Calif.-based Covad said it would expand its network to 100 markets from its current presence of 51 markets.

-- Deutsche Banc said the expansion will likely increase the company's estimated EBITDA (earnings before interest, taxes, depreciation and amortization) loss in 1999 to $129 million from the prior estimate of $105.9 million, and $252.8 million in year 2000 from a mid-$80 million estimated loss previously.

-- Despite the up-front spending for this network build out, Deutsche Banc said it expects significant revenue upside in year 2000 and beyond. The firm increased its 2000 estimated revenue to $234.7 million from $222.5 million, $447.7 million compared with the prior estimate of $348.6 million in 2001, and $700.5 million versus the prior estimate of $474.6 million in 2002.

-- the investment will most likely push out the achievement of positive EBITDA by about 6 months from 2002 to 2003.

-- shares of Covad gained 3-13/16 to 47-5/8 in afternoon trading on Nasdaq.
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