XO Holdings, Inc. (XOHO - XO Communications) Message Board

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Technology Stocks : XO Holdings, Inc. (XOHO - XO Communications)

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From: tech101	9/4/2008 7:11:22 PM
	of 615

JP meets with LVLT mgt ...... XO competitive route by route Unity • 2/3 of Core Network Services Unity enabled by YE08 M&A • When 2/3 of core services is unity-enabled, comfort level builds on doing additional M&A • Europe and CDN had no provisioning issues so acquisitions can be done there • Can be two kinds of acquisitions; can go after customer bases or assets; both kinds make sense ...... Valuation LVLT currently trades at about 11.1x our 2008 EBITDA estimate (a premium to peers, which are currently trading at 8.5x); however, we believe this premium is justified given acceleration in EBITDA growth in 2009 and beyond. In addition, we believe upside to our EBITDA forecast is possible, providing an opportunity for share appreciation, in our view. While we expect overall results to experience some volatility in the quarters ahead, we believe the proper groundwork has been laid and continued execution should drives shares higher to our $5 Dec 08 price target. In addition, an improved free cash outlook should provide greater comfort that Level 3 can successfully manage its highly levered balance sheet. Our $5 Dec 2008 price target is based on a discounted cash flow analysis, which applies a 9.3% WACC and a 4.5% perpetual growth rate investorvillage.com

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