D.A. Davidson Reiterates on TW Telecom, Raises PT

In a report published Thursday, D.A. Davidson & Co. analyst Donna Jaegers reiterated a Buy rating on

, raising its price target from $35.00 to $40.00. According to the report, TWTC's competitors are starting to be valued on a FCF yield basis. Since 2015 should be the start of increased free cash flow, analysts are stretching new valuation target to $40.00, 3.2% FCF yield and 10.7 their conservative 2015 EBITDA estimate. “Despite higher capex in 2014, we still expect TWTC to generate $50-$60 million in free cash flow in 2014 and over $150 million of FCF in 2015,” the report said. “TWTC bought back $50 million of stock during Q3 on its newly announced $500 million share repurchase program, and with over $500 million of cash on the balance sheet, we expect TWTC to continue to buy back its shares opportunistically.” TWTC announced early November it will spend $120 million on 20-year fiber leases for new dark fiber in five new markets and 27 existing markets. It will also expand its sales force in the new and existing markets. TWTC closed Tuesday at $30.47.