On Mar 24, Zacks Investment Research upgraded CenturyLink, Inc. CTL, the third largest wireline service provider in the U.S., by a notch to a Zacks Rank #2 (Buy).
Why the Upgrade?
CenturyLink’s restructured operating segments should help the company gain traction and achieve stronger top-line results, strategic revenue growth and operating efficiency over the long term. Further, CenturyLink’s broadband expansion goal should help it gain on the back of growing demand.
Moreover, the company, over the last few years, has been witnessing a lower rate of revenue decline. In 2014, the company’s core revenue trend recorded a narrower decline of 0.6% compared to 1.3% annual decline in 2013. In 2015, the company expects this trend to continue, buoyed by strategic revenues, improvement in broadband and Prism TV sales as well as high bandwidth data and hosting services.
Further, CenturyLink continues to expand its data centers. The company has recently opened a new data center in the Asia-Pacific region in the ongoing quarter. Notably, the company’s public cloud platform, CenturyLink Cloud, is already available in nations like Germany, United Sates, United Kingdom and Canada. Thus, we believe, this expansion of the public cloud platform to Singapore should allow the company to tap on opportunities in the enterprise business and significantly promote its cloud products.
Meanwhile, CenturyLink’s trailing four-quarter average earnings surprise stands at a positive of around 4.39%.
Also, upward estimate revisions reflect optimism regarding the stock’s prospects. The Zacks Consensus Estimate for 2015 and 2016 has moved north by 3.6% and 6.7% to $2.58 and $2.55 per share, respectively, over the last 60 days.
Other Stocks to Consider
Investors interested in the same sector may also consider stocks like InterDigital, Inc. IDCC, Juniper Networks, Inc. JNPR and ViaSat Inc. VSAT. All three stocks currently sport a Zacks Rank #1 (Strong Buy).
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