Enterprise Services Drive Level 3, Which Should Be 'On Your Radar'

By Craig Galbraith Comments
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The future for Level 3 Communications is bright if you believe a prominent investment service.

Zack's Investment Research has labeled Level 3's stock a "strong buy," up from "hold" just a few weeks ago. It's up from $27 per share in October to nearly $34 today.

"If Level 3 Communications Inc. can keep up this great momentum on the earnings estimate front and continue to impress analysts, we could see more gains ahead for this company, suggesting that you might want to put LVLT on your watch list for the future," Zacks analysts wrote.

A big part of the Colorado-based company's success as of late is due to the growth of its enterprise-services segment.

In its most recent earnings statement, Level 3 said core network services grew almost 3 percent year-over-year, to $1.4 billion. Within that, the enterprise segment was up more than 7 percent from the year prior. Look for the company's first-quarter earnings to be released on Feb. 5.

Level 3 has been busy expanding its fiber network, Fierce Telecom noted, increasing the number of connected buildings with access to the network to 100,000. In 2014, the company sees a growing opportunity in the security market, CEO Jeff Storey said in a Citibank webcast this week.

"Level 3 operates one of the world's largest Internet backbones and as a result we do deep-packet inspection and we see traffic at levels that nobody else in the world can see," Storey said. "We want to leverage that capability to help our enterprise customers deal with the threats that are out there on the Internet."

Level 3 announced in August that it was cutting almost 7 percent of its workforce in an attempt to "achieve profitable growth." The company has been burdened with billions of dollars in debt for years, but is making strides in lightening that albatross around its neck.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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