Frontier's Premium Valuation Vs AT&T, Verizon And Fiber Growth Target Risks Trigger Downgrade By This Analyst

Morgan Stanley analyst Simon Flannery downgrades Frontier Communications Parent, Inc FYBR from Equal-Weight to Underweight, lowering the price target from $23 to $19.
In Simon's view, there are three main drivers of his downgrade.
Frontier shares trade at a premium to Telco peers after recent outperformance. Frontier trades at a significant premium to wireline peers versus AT&T Inc T and Verizon Communications Inc VZ, which both offer 6%+ dividend yields.
Also Read: Frontier Communications Adds 381K New Fiber Builds Locations In Q4, Targets 1.3M New Locations In FY23
Flannery sees rising risks to Fiber growth targets due to increasing competition from FWA and Cable providers.
Frontier's plans for a slower expansion of Fiber construction could push out positive free cash flow generation until 2027 or beyond as leverage continues to ramp.
The main catalysts he focuses on include Fiber adds and ARPUs, and ongoing funding actions.
Simon notes that stronger Fiber adds and improved ARPU trends could help the company drive better-than-expected financial results.
He also points out that strategic alternatives could be another way to create shareholder value.
Price Action: FYBR shares traded lower by 9.63% at $21.35 on the last check Monday.

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