An update on MCLD from Multex...
<<MCLEODUSA (MCLD): UBS Warburg reiterated its Strong Buy on the shares of McLeod USA, largely because UBS Warburg's estimated floor value for MCLD is well above the stock's current level. The analysts point out that there has been growing investor concern regarding the ability of CLECs to meet their cash flow targets, especially in light of recent pre-announcements for telecom and equipment companies. As a result, the stocks of CLECs like McLeodUSA have suffered. The analysts believe that the company's gross margin improvements, along with cost controls to keep SG&A expenses in check, should significantly boost McLeod's cash flow. The company has also taken other steps, including hiring more salespeople, to enhance its growth going forward. According to the analysts, "Over the course of the next few quarters, we look for the salesforce, including the new hires, to increase its productivity and drive revenue growth." Moreover, the company has successfully penetrated certain key markets, and UBS Warburg believes there is more room for growth. McLeodUSA's beefed up sales team should prove positive for further expansion. Not surprisingly, UBS Warburg currently views MCLD as being undervalued. The estimated price floor of $6.40 is only 11.4 times 2003's estimated EBITDA, and the analysts give MCLD a 12-month price target of $12. MCLD ended trading on June 28 at $4.25.>>
Have a great holiday break...=)
Best Regards,
Scott |
