UPDATE: DA Davidson Downgrades Cbeyond to Underperform; Value Trap

DA Davidson reduced its rating on Cbeyond CBEY from Neutral to Underperform with a reiterated price target of $7. DA Davidson noted, "Downgrading to UNDERPERFORM from Neutral; recent price move is head fake. CBEY is a cheap stock with minimal debt, but an unproven strategy. We are maintaining our $7 price target, which equates to 2.6x our 2012 EV/EBITDA estimate. We think the recent 25% move in the stock was because of Q2 results, which are not sustainable. We think lower Q3 results the shares may reflect a more appropriate valuation." Cbeyond closed at $8.49 on Wednesday.