Morgan Stanley Maintains Equal-Weight on Windstream
Morgan Stanley reiterates its Equal-weight rating on Windstream (NASDAQ: WIN) ahead of 4Q11 earnings as the company focuses on revenue growth through diversification but remains exposed to secular risks.
Morgan Stanley says, "Through disciplined acquisitions the last few years that included NuVox, Iowa Telecommunications, Hosted Solutions, Q-Comm, and PAETEC, the company has successfully changed the business model while maintaining the lowest line loss among its peers at -2.2% in 3Q11. However, we see risks around pension / OPEB contributions (noting the recent account method change), capital intensity (2012 should be a heavy year at ~17%), cash taxes (bonus depreciation ends in 2013), and implementation of USF / ICC reform (Windstream is a beneficiary of broadband stimulus)."
WIN closed at $12.30 a share on Friday.
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