It’s that time of the year according to Nick Del Deo, analyst with MoffettNathanson. “The beginning of January, before Q4 earnings are reported, is a good time to take stock of news and events that transpired around the end of the year and incorporate them into our company models. While nothing earth shattering happened in the communications infrastructure space during this time, there are some important and interesting items to note,” Del Deo said.
First, commentary from Zayo at a recent investor conference suggests that bookings in CQ4 were soft, according to Del Deo. “If there is a single metric that investors look to on its earnings days, it is bookings. As such, it was important that we update our forecasts to reflect this outlook and observe how the changes flow through our model. This change – we assume the softness persists for the next few quarters with the magnitude diminishing over time – drives a $1 per share reduction in our target price, from $36 to $35,” he said.
Secondly, Del Deo said, SBA provided some commentary regarding the cadence of previously disclosed M&A-related churn. “The churn is expected to be disproportionately realized in 2017, and the first half in particular. While 2017 churn will be more front-end loaded than we had modeled, the total dollar amount through 2019 remains unchanged. As such, refining the timing does nothing to change the stock’s value or our opinion. SBA did repurchase a large amount of stock in Q4, which we view positively,” he said.
Stock Analysis: Nick Del Deo Analyst at MoffettNathanson
January 16, 2017
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