UPDATE: Deutsche Bank Initiates Frontier Communications Corp. with Hold on Lingering Questions
In a report published Tuesday, Deutsche Bank analyst Brett Feldman initiated coverage on Frontier Communications Corp. (NASDAQ: FTR) with a Hold rating and $4.00 price target.
In the report, Feldman noted, “We are initiating coverage of Frontier (FTR) with a Hold rating and $4.00 PT. In our view, FTR's dividend yield of 9.8% reflects NT pressure on revenue and EBITDA coupled with lingering questions about LT dividend sustainability. On one hand, we do not see any immediate risk that FTR needs to cut its dividend because coverage through 2014 appears sufficient based on our FCF payout ratio estimates slightly under 50% in '13 and '14 thanks to improving revenue declines and well defined cost-cutting plans. On the other hand, we do expect the stock to flat-line based on persistent fears of a dividend cut while investors await the company's discussion of its FCF outlook for 2014 and beyond.”
Frontier Communications Corp. closed on Monday at $4.08.
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