DA Davidson Initiates CSAL At Neutral

In a report published Thursday, analysts at DA Davidson initiated coverage of

. The price target was set to $31. The company has only recently been spun off from

in to a publicly traded REIT. According to DA Davidson, "This is a different type of REIT or a "canary in the coal mine" of REITS and could take investors time to warm up to." The company has bought Windstream's network distribution assets and consumer CLEC and is now leasing these assets back to Windstream. With Windstream being CSAL's only tenant at present, the analysts expect the latter company to witness limited growth potential in the near future. "Revenue could increase if WIN asks CSAL to contribute capex and to participate in new projects such as building out new fiber," the analysts said. Given that revenue growth is expected to be flat in the near term, DA Davidson expects CSAL to take on a "rapid sequence of acquisitions." This could prove favorable for the company and drive growth, especially if it avoids expensive or inappropriate deals. In addition, despite the fact that Windstream has been facing various challenges, including a BB rating from Fitch and a BB- from S&P, as well as operating difficulties, the company does generate adequate cash flow to pay its lease obligations to CSAL. Therefore, there is unlikely to be any major near-term risk for CSAL.