UPDATE: Nomura Lowers PT on Frontier Communications Following Solid 2Q13 Results

In a report published Friday, Nomura analyst Adam Ilkowitz reiterated a Buy rating on Frontier Communications Corp. FTR, but lowered the price target from $5.50 to $5.00. In the report, Nomura noted, “Frontier's 2Q13 results were highlighted by better customer results, particularly Broadband net additions. Revenue and Adj. EBITDA were largely as expected, while free cash flow was ahead of our forecast on the timing of capital spending. Guidance was maintained, most importantly for the $825-925mn in free cash flow that supports dividend payments and debt reduction. Management again reiterated the ability to use free cash flow and cash on hand to meet all obligations in the coming years. We continue to view the dividend as the main attraction for Frontier shares, and expect free cash flow to continue to be stable or modestly decline over time. Our updated $5 target price (from $5.50) is based on our DCF analysis using 4.5x terminal EBITDA and a 7.4% cost of capital.” Frontier Communications Corp. closed on Thursday at $4.50.