UPDATE: Deutsche Bank Initiates Coverage on Level 3 Communications with Buy Rating, $26 PT on Forecast Strong Secular Growth

In a report published Tuesday, Deutsche Bank analyst Brett Feldman initiated coverage on Level 3 Communications LVLT with a Buy rating and $26.00 price target. In the report, Feldman noted, “Our Buy rating on Level 3 is based on forecast strong secular growth in global IP traffic and expected inflection points in LVLT's revenue growth, FCF and net income which should allow it to unlock substantial value from its NOLs. Given our positive view, we believe recent underperformance (-15% YTD) represents an attractive entry point, with 32% pot'l upside to our $26 PT. LVLT provides a broad portfolio of telco services to enterprise and wholesale customers, leveraging 35K miles of undersea fiber, 105K intercity miles and 35K metro fiber miles to connect major traffic hubs, data centers and 15K on-net buildings. We believe these strategic assets position LVLT to benefit from robust growth in global IP traffic, which should increase 4-fold through 2016.” Level 3 Communications closed on Monday at $20.00.