Morgan Stanley recently released a company note on Level 3 Communications, Inc. LVLT after a recent decline in stock price has made the company have an attractive valuation. Analysts at Morgan Stanley upgraded Level 3 Communications from Equal-Weight to Overweight with a $60 price target.
Simon Flannery and Lisa Lam, analysts at Morgan Stanley, wrote, "We see the company as offering an attractive risk-reward at current levels, with good visibility into 2016 growth, undemanding valuations, a strong balance sheet, and the potential for value creation from M&A, return of capital and potential strategic optionality."
2 Key Takeaways
Analysts at Morgan Stanley gave two key takeaways on why they see strength in Level 3 Communications.
1. Top-Line Growth Outlook Morgan Stanley noted that they expect 2016 revenue growth to accelerate throughout the year, reaching 4.9 percent in 4Q16. Increasing trends in cloud computing, streaming video, and mobile broadband may allow Level 3 Communications to further drive revenue growth and expand their market share. 2. Cash Flow Generation Analysts believe that with the significant cash flow the company generates from operations, management may continue to return capital to shareholders in the form of increased dividends or share repurchases, which should increase the value of the stock.Level 3 Communications closed trading Wednesday at $45.66.
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