Citi Analysts Preview Level 3 Communications' Q3 Earnings

Level 3 Communications, Inc. LVLT is expected to release its 2Q16 results on July 27. Citi’s Michael Rollins maintained a Buy rating on Level 3, with a price target of $66, saying that the company would likely report solid results.

2Q Results Preview

Analyst Michael Rollins expects Level 3 to report its 2Q total revenue at $2.09 billion, marginally beating consensus estimates. Total CNS revenue is estimated to grow 2.1 percent year-over-year to $1.98 billion, also slightly above consensus.

Normalized 2Q OIBDA is estimated at $713 million, just above the consensus expectation of $710 million, while the normalized EPS estimate is at $0.45, meaningfully higher than the consensus expectation of $0.34.

Related Link: Level 3 Should Consider Sale Given Low Interest Rate Environment

Investor Focus Elsewhere

Although Level 3 may announce solid results, investors would likely focus on management’s “future ambitions for the over-arching strategy and capital allocation given recent press reports and the company’s improving financial flexibility,” Rollins commented. He added, however, that the company has “solid operating prospects within the core communications segment, improving financial flexibility with positive FCF, and strategic optionality within the category.”

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