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Technology Stocks : ACNS: American Communications Services
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To: Vinil Patel who wrote (42)7/29/1997 4:16:00 PM
From: jim detwiler   of 102
 
acns 16 dollar report report

Combined with the recent $75 million preferred offering, we estimate that the Company is fully funded through the end of 1998. ú We believe that funding and dilution were major issues that are now removed and that the Company is now on an equal footing, from a finance standpoint, with other major CLECs. ú We continue to believe that the data/packet-driven strategy is the best strategy for the future of telecommunications. ú We continue to believe that the Company will have the greatest revenue growth and improvement in operating productivity of any CLEC in 1997. ú The shares trade at a 50% discount to the comps on an enterprise value multiple of 4Q 1997 net PPE basis (2.6x versus 5.5x) and a 45% discount on an enterprise value multiple of 1998 revenue basis (2.7x versus 5.0x). ú We reiterate our "strong buy" investment rating on the shares with an end-of-year 1997 price target of $16 (enterprise value of approximately 4.0x 4Q 1997 our preliminary revised net PPE estimate of $230-240 million). ú We are reviewing our model with management and expect to revise it to reflect the recent financing.

VALUATION
We believe that investor concerns about the Company's capital needs have kept this stock price below what its current performance and outlook warrant. The shares trade at a 50% discount to the comps on an enterprise value multiple of 1998 net PPE basis (2.6x versus 5.5x) and a 45% discount on an enterprise value multiple of 1998 revenue basis (2.7x versus 5.0x).
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