Bank of America Reiterates Underperform on Alaska Communications Systems Group on 4Q Results

In a report published Wednesday, Bank of America reiterated its Underperform rating and $1.00 price target on Alaska Communications Systems Group ALSK. Bank of America noted, “Alaska Communications' 4Q results show it to be executing on a plan to invest in and grow the Business & Wholesale wireline segment. Both the benefit (accelerating growth) and the cost (margin pressure) of this effort were evident in 2012 results and we expect a similar focus in 2013. After investing in wireline business, management has been clear that it will use excess cash to reduce leverage and any near term upside, including distributions from the AWN transaction, will go towards paying down debt rather than rewarding equity holders. We reiterate our underperform rating and $1 price objective which is based on a 4.7x '14E EV/EBITDA multiple, a discount vs. the RLEC average of 5.0x that we view as appropriate for a wireline business with limited near term growth potential and no dividend yield.” Alaska Communications Systems Group closed on Tuesday at $1.64.