UPDATE: Morgan Stanley Upgrades Neutral Tandem to Equal-Weight on Uncertain FCF Magnitude

In a report published Monday, Morgan Stanley analyst Simon Flannery upgraded the rating on Neutral Tandem

from Underweight to Equal-Weight, but removed the $2.00 price target. In the report, Flannery noted, “While IQNT is an attractive alternative to the Bell system of voice termination, priced some 20 – 25% below on average, it is primarily a voice provider in an increasingly data-centric world. Attempts to diversify revenues have so far been unsuccessful and have resulted in dampened margins. With the recent sale of its data business, IQNT improves its economic model back towards steady FCF generation. However, the secular decline of voice revenues leaves the magnitude of FCF uncertain.” Neutral Tandem closed on Friday at 4.77.