Nextel upgraded to strong buy.
biz.yahoo.com
Friday October 6, 9:54 am Eastern Time
RESEARCH ALERT-ING Barings ups Nextel Comms to strong buy
NEW YORK, Oct 6 (Reuters) - ING Barings analyst Frank Marsala on Friday said he was upgrading wireless telephone company Nextel Communications Inc. to a strong buy from a buy, one day after the company's shares fell more than 10 percent on worries over lower-than-expected U.S. subscriber growth.
-- shares of Nextel (NasdaqNM:NXTL - news) surged about 6 percent in opening trade on the Nasdaq stock market, rising $2 to trade at $40-7/16.
-- Marsala said Thursday's stock drop was a ``clear overreaction'' on what was ``essentially no news,'' and added that he thought the downturn would reverse in a very short time.
-- said Nextel traded off after chief executive Tim Donahue said net additions will be ``in excess of 540,000'' for the quarter.
-- Marsala said, ``Investors took this news to mean that growth was slowing -- a view that we do not agree with.''
-- said the company's guidance has been 540,000-550,000 subscriber growth for the third quarter and Donahue's comments ``did nothing to alter this outlook.''
-- ``The fact that AT&T Wireless is reportedly working 'feverishly' on completing a deal for Nextel only adds to the attractiveness.''
-- said wireless stocks have traded at about 75 to 80 percent of their projected long-term EBITDA growth rates. With that, he said he expects Nextel to trade at about 30-times forward EBITDA multiple for a share price in the $80 range.
-- said Nextel's recent presentation at ING Barings' media and telecommunications conference ``provided a nice reminder that Nextel business model generates some of the best financial results in the business.''
-- said Nextel's subscribers generate $3,700 of lifetime revenue per subscriber, which was topped only by its affiliate, Nextel Partners Inc. (NasdaqNM:NXTP - news), which has generated $4,300.
-- said Nextel's $20 of cash flow per subscriber was better than that produced by Nextel's rivals that have a 15-year history and cash flow margins in the 40 percent range. |
