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Windstream 'Less Attractive Than Other Rural Wireline Operators'

By Craig Galbraith
November 29, 2012 - News

"Fail[ing] to meet expectations in 2012," Windstream investors should be prepared for disappointment, one prominent investment bank said this week.

Piper Jaffray downgraded the national CLEC's rating from "neutral" to "underweight" in a report released Wednesday, lowering the expectations for Windstream stock from $8 to $6.50, according to Benzinga.

"... We believe there is limited upside to owning the stock," the firm noted in the report.

Piper Jaffray cites concerns about dividend sustainability for the company weighing on its shares.

"Not only is Windstream failing to get credit for one of the highest dividend yields, we believe the high dividend yield makes it even more vulnerable to any dividend taxation policy changes. We do believe that trends can improve at Windstream, but probably not fast enough. In our opinion, Windstream is less attractive than other rural wireline operators," the report said.

Despite the downgrade, the CLEC's stock rose 4 percent on Wednesday, after opening almost 3 percent lower than Tuesday's close. As of 9:54 a.m. ET on Thursday, it was up 4 cents, or 0.47 percent, to $8.49 per share.

Little Rock, Ark.-based Windstream provides voice and data services, as well as managed services, to businesses.

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