Skip to main content

Market Overview

CenturyLink Is 'Poorly Positioned,' Guggenheim Says In Downgrade

CenturyLink Is 'Poorly Positioned,' Guggenheim Says In Downgrade

Communications provider to global enterprise customers Centurylink Inc (NYSE: CTL) is "poorly positioned" within the changing telecommunications market, and the stock should be sold by investors, according to Guggenheim.

The Analyst

Guggenheim Partners' Mike McCormack downgraded CenturyLink from Neutral to Sell with a price target lowered from $17 to $11.

The Thesis

The bearish case for CenturyLink is based on concerning growth rates in multiple customer segments that were seen in the past few quarters, McCormack said in the Thursday downgrade note.

For example, excluding the impact of ASC 606, the consumer segment showed a 5.4-percent revenue drop due to multiple pressures from legacy losses and broadband losses, the analyst said. 

Medium and small business revenue dipped 4.4 percent in the third quarter after revenue fell 2.6 percent in the second quarter, McCormack said. The company noted losses of legacy voice services, but the pressures within the segment will intensify moving forward, as Cable MSOs are gaining market share at the expense of companies like CenturyLink, he said. 

Revenue in the enterprise segment has been under notable pressure and fell 2.3 percent in Q3, the analyst said.

While CenturyLink highlighted lower CPE revenue and the termination of a government contract, the bigger picture is the continued mix shift of legacy services to IP/ethernet, and pricing erosion will remain a problem moving forward, McCormack said. 

International and global accounts revenue fell 3.4 percent in the recent quarter due to "fairly consistent and long-lasting" foreign exchange pressures, and the wholesale and indirect segment continues to suffer from an ongoing wireless substation impact, according to Guggenheim. 

Price Action

CenturyLink shares were down 3.65 percent at $14.66 at the time of publication Wednesday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For January 24, 2019

CenturyLink Is Diversifying Away From Rural Telecom, Jefferies Says In Upgrade

Latest Ratings for CTL

Jul 2020OppenheimerDowngradesOutperformPerform
Jun 2020UBSMaintainsNeutral
May 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for CTL
View the Latest Analyst Ratings


Related Articles (CTL)

View Comments and Join the Discussion!

Posted-In: Guggenheim Partners Mike McCormack telecommunicationAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

GIKColliers SecuritiesInitiates Coverage On14.0
SANWLake StreetInitiates Coverage On6.0
LILAMorgan StanleyDowngrades15.0
BEJP MorganUpgrades36.0
NEXACredit SuisseUpgrades11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at