UPDATE: Deutsche Bank Initiates Windstream Corporation with Hold on Shift Toward Revenue Growth Sources
In a report published Tuesday, Deutsche Bank analyst Brett Feldman initiated coverage on Windstream Corporation (NASDAQ: WIN) with a Hold rating and $8.00 price target.
In the report, Feldman noted, “We acknowledge the recent shift towards revenue growth sources, but we expect the stock to fade slightly over the next 12 months based on incremental investor doubts about WIN's ability to sustain its current dividend. We believe that the doubts are based mostly on the fact that WIN‘s mid-60% guidance for ‘13 FCF payout ratio is highest among peers and could increase further, for example, to 69% in ‘15 in our model. Although management is committed to maintaining a constant dividend, we are skeptical: our 2016 payout ratio estimate is 91% due mainly to a step-up in cash taxes. We believe that WIN may need to address the issue of maintaining a sustainable payout ratio, although not necessarily during '13.”
Windstream Corporation closed on Monday at $8.40.
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