Oppenheimer Tweaks Windstream Estimates After CSAL Spin-Out

In a report published Tuesday, Oppenheimer analysts maintained a Perform rating on

, while reducing the estimates to adjust for the spin-out of

. Windstream reported consolidated revenue at $1.42B, representing a 3.2 percent y/y decline, missing the estimate by 60bps. Adjusted EBITDA came in at $495M, with an 8.5 percent y/y decline, although 90bps ahead of expectations. "EBITDA margins beat by 60bps likely driven by the lack of CPE sales this quarter. CAPX spending was nearly 12% below forecast," the analysts added. Although Windstream suffered total consumer connection losses of 21K, this was 4K better than projected. The beat was primarily on account of fewer-than-estimated losses of access lines. "SMB and enterprise remain slightly weak, however, as cable continues to gain share in SMB. Positively, business and carrier ARPU came in 50bps and 140bps better than forecast respectively," the analysts added. The revenue estimate for 2015 has been reduced by 1 percent to $5.65B, representing a 3 percent y/y decline. The EBITDA estimate has been cut by 90bps to $1.94B, or a decline of 3.7 percent y/y. The revenue and EBITDA estimates for FY16 have been reduced by about 90bps. The EPS estimates for FY15 and FY16 have been revised downwards from $0.07 to ($2.00) and from $0.06 to ($1.72), respectively, to reflect the impact of the spin-out.