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Re: BoA still believesMixed bag in 4Q Level 3 4Q12 results were a mixed bag. Better than projected Core Network Services (CNS) revenue ($1.42bn versus BofAML and Street of $1.41bn) was more than offset by missed Adjusted EBITDA guidance, and a muted 2013 forecast. We attribute the -13.5% sell view Level 3 as attractive based on projected FCF yield (2013E 2% and 2014E 8%), Adjusted EBITDA growth (2013E 15% and 2014E 14%) and a relatively low bar with regard to investor sentiment. Moving parts in reported results Adjusted EBITDA of $395m (versus BoAML of $398m and Street of $400m) fell short of guidance of $407m. Level 3 reported EBITDA of $407m included a onetime $23m benefit and $15m in Sandy and other expense reflected in Street estimates. We attribute the shortfall, in part, to greater than projected integration expense, which was driven in part by headcount reductions which are expected to lower headcount expense $40m in 2013. Estimate revision We have revised our estimates following 4Q12 results. Our 2013 revenue estimate decreases from $6,580m to $6,509m on a projected 1Q sequential step down. Our 2013E Adjusted EBITDA estimate decreases from $1,759m to $1,681m. We have also revised our 2013E FCF estimate 4.5% lower from $195m to $113m on greater use of working capital Reiterate Buy rating $37.50 price objective We reiterate our Buy rating and $37.50 price best risk coverage universe. Our $37.50 price objective is based on a weighted average of our Bear, Base and Bull case scenario analysis.>>
I thought if I made the text bigger it would become more believable. |
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Msg # | Subject | Author | Recs | Date Posted |
117153 | Re: BoA still believes | mrwright192234 | 1 | 2/12/2013 9:29:19 PM |