Why CenturyLink Inc. Is Poised to Bounce Back
Feb 11th 2014 10:22AM
Updated Feb 11th 2014 10:24AM
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of CenturyLink climbed 2% this morning after Macquarie upgraded the integrated telecommunications company from neutral to outperform.
So what: Along with the upgrade, analyst Kevin Smithen boosted his price target to $33 (from $31), representing about 14% worth of upside to yesterday's close. While momentum traders might be turned off by the stock's steady decline over the past year, Smithen believes CenturyLink is a rather timely opportunity given the mounting pressure on management to unlock value.
Now what: According to Macquarie, CenturyLink's risk/reward trade-off is pretty attractive at this point. "We point out that [Frontier Communications] has shown an interest in acquiring more rural access lines and believe divestitures could be one scenario for CTL," noted Smithen. "In our view, all of the options we looked at have the potential to return 20+% to shareholders over the next year." With the stock boasting a juicy 7.5% dividend yield, contrarians who commit will even get paid to wait for the thesis to play out.
More compelling ways to grow
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.
The article Why CenturyLink Inc. Is Poised to Bounce Back originally appeared on Fool.com.Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.