BW Inside Wall St. very positive on Qwest
businessweek.com@@KPsXsYQA0rAOKwAA/1998/32/b3590102.htm
MORE CALLERS DIAL QWEST'S NUMBER
Stephen Dalton, head of First Capital Group, thinks he has spotted an up-and-coming prize in telecom gear and services, a fast-growing field. His pick:
Qwest Communications International (QWST), the fourth-largest long-distance
carrier serving retail and wholesale customers.
''It is dwarfed only by WorldCom,'' says Dalton, who manages assets of more
than $1 billion. Dalton's record in picking mispriced stocks has beaten the market
indexes. In the first half of 1998, his group, a unit of First Union, posted gains of
22.7%, vs. 17.7% for the Standard & Poor's 500-stock index.
Dalton says Qwest is well fixed to take advantage of changes in the industry, including growing demand for increased bandwidth capacity and Internet-related services. Qwest, which got a bad report in this column in late February, when it was trading at split-adjusted 36, has risen to 40 3/4 by July 28. Qwest is ''still little understood'' and deserves a higher valuation, says Dalton. He expects the stock will hit 60 in a year.
Certain analysts are also high on Qwest. Neither the merger of AT&T and British Telecom nor Bell Atlantic's purchase of GTE has dampened their enthusiasm. Those deals ''highlight the value of Qwest, with its state-of-the-art, U.S. long-haul network, and strong back office systems,'' says Blake Bath of Lehman Brothers. Qwest is building an 18,440-mile fiber-optic network, scheduled for completion by mid-1999. Bath figures Qwest will post earnings of 33 cents a share in 1999, vs. an estimated loss of 11 cents in 1998.
Analyst William Vogel of NationsBanc Montgomery Securities says Qwest will ''continue to do well,'' partly because it's the only company with a network in place for ''data Internet Protocol connectivity.'' And it is likely, he adds, that Qwest will also ''enter into a partnership with a European communications company over the next few weeks.'' Qwest spokesman Steven Jacobsen says the company is aggressively evaluating its options in Europe.
BY GENE G. MARCIAL
Updated July 30, 1998 by bwwebmaster
Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
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