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Level 3 Beginning to 'Fulfill Its Potential'

By Craig Galbraith
April 02, 2014 - News

Channel stalwart Level 3 Communications, mired in debt for years, "has finally turned the corner."

That assessment comes from Kevin Smithen, an analyst with Macquarie, who just raised his price target on Level 3's stock to $44 – a price the Colorado-based company hasn't seen since 2008. It's already up 6 percent this week, and as of 1:37 p.m. ET, it was trading at $41.01. He maintained a "neutral" rating on the stock, falling just short of upgrading it.

"After tracking LVLT on and off for nearly two decades, we are starting to believe that it has finally turned the corner and begun to fulfill its potential as a core Internet infrastructure investment," Smithen said, according to Street Insider.

Smithen, who met with Level 3 CEO Jeff Storey and other company executives on Tuesday, also raised his EBITDA (earnings before interest, taxes, depreciation and amortization) forecast for the first quarter, all of 2014 and all of 2015.

In the fourth quarter of 2013, Level 3 reported a profit of $14 million, compared to a net loss of $56 million during the same period a year earlier. The company's core network services revenue saw growth from $1.39 million in 2012's fourth quarter to $1.44 million in 2013's fourth quarter. The number also increased for all of 2013, from $5.46 million in 2012 to $5.59 million in 2013.

Channel partners surely noticed the 11 percent spike in revenue within the North America core network services enterprise segment, jumping from $586 million in 2012's fourth quarter to $651 million in 2013's fourth quarter. For all of 2013, the figures totaled almost $2.5 million for enterprise core network services in North America, compared to $2.3 million for 2012. 

Follow senior online managing editor @Craig_Galbraith on Twitter.

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