5 Communications Stocks Pacific Crest Is Buying Before Earnings

Pacific Crest Securities released Q1 Communication Services Preview on Sunday.

Overall, analysts Michael Bowen and Trevor Upton felt that cloud adoption was accelerating which would benefit connectivity providers and IDCs.

Below are five stocks the analysts recommended buying before earnings along with comments from the report, ratings and price targets.

GTT Communications Inc GTT - Outperform, $24 price target

“We expect GTT to report a slight beat to consensus estimates on revenue and EBITDA. GTT closed on MegaPath’s Managed Services business on April 1, which we expected to drive margin expansion in 2015. The company recently hired a new CFO ,and we would not be surprised if it outlines its next phase of growth goals. We also expect to hear an update on sales force expansion, which is expected to increase to 100 in 2015 from 70 in 2014.”

GTT is expected to report earnings on May 7.

Equinix Inc EQIX - Outperform, $255 price target

“We expect revenue slightly ahead of Street estimates for revenue and EBITDA, driven by y/y growth in MRR on a constant-currency basis and a secular shift to the cloud. Pricing has been the most stable in the Americas as demand for cloud connectivity is increasing, in our view. We expect an in-line to beat quarter, with guidance slightly raised and would remind investors that our bull case on shares remains $280.”

Equinix reports earnings on April 29.

Rackspace Hosting, Inc. RAX - Outperform, $58 price target

“Our revenue and adjusted EBITDA estimates are in line with consensus and guidance. We believe we are in the early stages of a secular shift from on-premise data centers to hybrid clouds made up of private and public cloud platforms. We believe the company is executing more efficiently and improving its managed service value proposition. In our opinion, our case was reiterated after attending the AWS Summit in San Francisco on April 9. Competition is a primary focus heading into 1Q15. We anticipate an in-line quarter versus consensus estimates.”

Rackspace reports earnings on May 11.

SBA Communications Corporation SBAC - Outperform, $138 price target

“We expect SBAC to report generally in-line to higher revenue, EBITDA and AFFO, and we expect no change to domestic core growth of 9 percent and more than 13 percent for international. We expect to hear strong leasing activity and believe the company will speak on the potential positive impact of the AWS-3 auction. We anticipate SBAC will generate a quarter beat with an increase in 2015 guidance on a constant-currency basis.”

SBA Comminications reports earnings on April 24.

Cogent Communications Holdings Inc CCOI - Outperform, $45 price target

“We are slightly ahead of consensus on revenue, and $0.04 ahead on EPS on a $0.03 base. We believe CCOI is well-positioned to benefit from acceleration in its corporate segment, and expect acceleration in the net-centric segment as 2015 progresses. Expect a FX headwind of $2.25 million to $2.50 million in the quarter, better-than-expected corporate revenue growth, but lagging net-centric growth. However, CCOI should show sequential improvement in its netcentric constant-currency revenue growth. FX is already priced in, we are buyers of CCOI.”

Cogent Communications reports earnings on May 7.