Zayo Among The Most Attractively Valued Providers Of Telecom Infrastructure

Although Zayo Group Holdings Inc’s ZAYO shares are trading at a discount to peers, the company appears poised for accelerated revenue growth over the next several quarters, Goldman Sachs’ Brett Feldman said in a report. He maintained a Buy rating on Zayo, with a price target of $39.

Feldman also added the stock to the Americas Conviction List.

Attractively Valued

“In our view, Zayo is among the most attractively valued providers of telecom infrastructure,” Feldman commented. He explained that the discount at which Zayo’s shares were trading to peers represented “an attractive buying opportunity,” especially in view of recent data-points that indicate growing fiber demand.

The analyst expects the company’s core recurring revenue growth to accelerate from 8 percent to nearly 10 percent over the next few quarters. He added, “These include accelerated growth in major cloud platforms (Azure), roll-outs of new OTT video services (DIRECTV Now), ramping small cell deployments (Crown Castle) and planned deployments of fixed wireless broadband (Google).”

Recent News

In Q2, Emerald Acquisition Ltd. purchased 16,909 shares of Zayo’s stock, Holdings Channel reported.

The institutional investor’s purchase was valued at approximately $472,000.

Earlier this month, the company announced plans to open its fourth Chicago data center due to strong local demand.

In September, Zayo was awarded 1,800 site national mobile infrastructure contract.