Morgan Stanley Comments on Tw Telecom (TWTC)

Morgan Stanley was reserved on Tw Telecom TWTC in a report released today. Morgan Stanley stated a belief that strong 1Q results were already priced into stock of the company. Morgan Stanley writes, “We expect to see some evidence of stronger top-line momentum related to moderating churn and 18% bookings growth during 2010, with revenue from larger wireless deals beginning to ramp. However, seasonal cost headwinds and up-front expenses associated with the stronger sales trajectory should result in slight margin pressure sequentially with contract re-rates and downward trending sales productivity as key risks. Additionally, consistent with 2010, we expect the company to raise capex guidance for the year as more complex, capital intensive deals constitute a larger percentage of the pipeline and on-net building adds accelerate. We continue to believe the stock is fairly valued at 8.5X our 2011E and 7.8X our 2012E EBITDA.” Morgan Stanley currently has an Equal-Weight rating on Tw Telecom. Shares of Tw Telecom closed at $21.94 on Friday, down slightly from $21.94 at the open.