UPDATE: Bank of America Reiterates Neutral Rating, Lowers PT on Frontier Communications Corp. on 4Q Results

In a report published Friday, Bank of America reiterated its Neutral rating on Frontier Communications Corp. (NASDAQ: FTR), but slightly lowered its price target from $4.75 to $4.25.

Bank of America noted, “Frontier reported 4Q results that came in light vs. Street expectations and reiterated previously disclosed guidance covering FCF, cash taxes and capex. For the first time, FTR did not disclose access lines, the most widely used wireline metric, which it now deems to be less relevant than total customers and revenue per customer. Regardless of the metrics management chooses to report, we continue to believe it will be difficult for Frontier to simultaneously cut costs AND drive revenue improvements. We estimate ‘13/'14 dividend payout ratios of 54%/46% (lower in '14 on tax benefits from '13 of $80m) and view the current 10% dividend yield as well-covered by free cash flow generation. This said, we are lowering our price objective to $4.25 from $4.75 based on updated peer multiples. Our new price assumes a 5.1x '14 EV/EBITDA multiple, a slight discount to CTL (5.2x) and WIN (5.6x), and it implies a 9.4% dividend yield.”

Frontier Communications Corp. closed on Thursday at $4.04.

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