On Friday, BofA Securities maintained a positive outlook on Frontier Communications (OTC:FTRCQ) (NASDAQ:FYBR) stock, reiterating a Buy rating with a steady price target of $30.00.
The telecom company reported second-quarter 2024 revenues of $1.48 billion, surpassing both BofA Securities' projections and consensus estimates, which stood at $1.46 billion. This revenue increase was attributed to growth within the Business and wholesale unit.
Frontier Communications experienced a notable surge in its Consumer fiber subscribers, adding 90,000 new customers during the quarter. This figure exceeded BofA Securities' expectation of 80,000 and the general market forecast of 75,000. The company's success in expanding its fiber customer base was a key factor in the analyst's continued endorsement.
The company also reported adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $560 million. This performance edged out both the Street's and BofA Securities' estimates, which were slightly lower at $557 million and $559 million, respectively. The strong EBITDA results further solidified the firm's confidence in Frontier Communications.
BofA Securities highlighted Frontier Communications' ability to enhance its key fiber metrics significantly, which has helped to more than compensate for the declining aspects of its copper business. The positive developments in the company's fiber segment appear to be a driving force behind the analyst's decision to maintain the Buy rating.
The report underscores Frontier Communications' effective strategy in growing its fiber subscriber count and improving financial performance, which has led to the affirmation of the $30.00 price target by BofA Securities.
InvestingPro Insights
Frontier Communications (NASDAQ:FYBR) has been navigating the competitive telecom landscape with notable success, as reflected in the recent positive outlook from BofA Securities. According to InvestingPro data, Frontier Communications boasts a market capitalization of approximately $6.83 billion and a high trailing twelve-month P/E ratio of 80.22, which indicates a premium valuation in the market. Despite concerns about the company's significant debt burden and cash burn, as highlighted in two InvestingPro Tips, Frontier Communications has demonstrated strong returns with a 1-year price total return of 59.5%.
InvestingPro data also reveals that the company's revenue growth has been relatively flat, with a slight decrease of 0.12% over the last twelve months as of Q1 2024. However, Frontier Communications has managed to maintain a robust gross profit margin of 63.54% in the same period, showcasing its ability to retain profitability within its operations. Additionally, the company's recent surge in consumer fiber subscribers is a testament to its effective strategy in growing its customer base, aligning with the positive sentiments expressed by BofA Securities.
Investors looking to delve deeper into Frontier Communications' performance and future prospects can find a wealth of additional InvestingPro Tips at https://www.investing.com/pro/FYBR, which provide detailed analysis and guidance for informed decision-making.
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