JP Morgan Assesses U.S. Telecom and Cable Services Sector

JP Morgan had previewed 2Q results for the U.S. Telecom and Cable Services sector, and has assessed each one as follows listed with upside/downside risks and price target:

American Tower (NYSE: AMT) Overweight
Credit environment could delay share repurchase, delays in carrier builds, wireless industry consolidation risks.
Price target: $48

AT&T Inc. (NYSE: ATT) Neutral
Access line losses, increase in broadband growth, wireline pressures, competitive wireless fundamentals, deteriorating trends drive lower FCF
Price target: $28

Cablevision Systems Corp. (NYSE: CVC) Overweight
Limited penetration upside may hinder growth, programming costs/hardball negotiations, managing with shareholder interests in mind?
Price target: $30

Cbeyond, Inc. (NASDAQ: CBEY) Overweight
Leased connectivity, regulatory, competition, bandwidth capabilities limited, elevated churn.
Price target: $18

CenturyLink (NYSE: CTL)
Revised estimates reflect higher revenue for 2011

Clearwire Corporation (NASDAQ: CLWR) Neutral
Faster than anticipated expansion, improved credit market, increasing competition, capital intensity.
Price target: n/a

Cogent Communications (NASDAQ: CCOI) Overweight
Increased ethernet competition, accelerated price compression for IP-based services, inability to increase penetration of on-net buildings or add more buildings to company network.
Price target: $16

Comcast Corp (NASDAQ: CMCSA)

Crown Castle International (NYSE: CCI) Neutral
Credit environment (up/down), foreign currency volatility, delays in carrier builds.
Price target: $43

DIRECTV (NASDAQ: DTV) Neutral
Acquisition by AT&T or Verizon, Continued share gains, lack of triple-play bundle, free content?
Price target: $36

DISH Network Corp. (NASDAQ: DISH) Overweight
Rising SAC threatens to destabilize margins, lack of triple-play bundle, potential Tivo patent infringement, free content?
Price target: $25

Equinix, Inc. (NASDAQ: EQIX) Overweight
Increasing competition, capital intensity, integration
Price target: $130

Frontier Communications Corp. (NYSE: FTR) Neutral
Faster realization of synergies, SpinCo operational improvements, faster than anticipated access line loss, higher than anticipated capital requirements.
Price target: $7.50

Leap Wireless International, Inc. (NASDAQ: LEAP) Underweight
Investment risks, Leap is able to stabilize ARPU, Leap is acquired, regains growth momentum and reduces churn.
Price target: $11

Level 3 Communciations, Inc. (NASDAQ: LVLT) Neutral
Revenue growth, operating leverage, internet traffic and pricing, failure to improve margins, liquidity risk.

MetroPCS Communications Inc. (NYSE: PCS) Neutral
High churn can be volatile, economic headwinds, Metro is able to stabilize ARPU, competitive threats diminish.
Price target: $7

NTELOS Holdings Corp. (NASDAQ: NTLS) Neutral
Wireless resilience, wholesale recovery, Sprint/Nextel overbuild, regulatory change, competition.
Price target: $15

Qwest Communications (NYSE: Q)
Revised statements reflect higher 2011 margins.

SBA Communications (NASDAQ: SBAC) Overweight
Credit environment, delays in carrier builds, weakness in site development margins.
Price target: $44

Sprint Nextel (NASDAQ: S) Neutral
Retention initiatives take hold quickly, boost could drive profitability, churn remains elevated, pricing comes down further.

Time Warner Cable, Inc. (NYSE: TWC) Overweight
Telco competitive threats, capital expenditure refresh, all content goes free.
Price target: $63

TW Telecom, Inc. (NASDAQ: TWTC) Overweight
Continued deceleration of revenue due to economic weakness impacting enterprise trends, acceleration of carrier disconnects, price erosion.
Price target: $23

Verizon Communications, Inc. (NYSE: VZ) Neutral
Access line losses, increase in broadband growth, capital-intensive FiOS rollout, competitive wireless fundamentals.
Price target :$28

Windstream Communications (NASDAQ: WIN) Neutral
Improving operational metrics, increasing potential M&A deals, potential large acquisition, potential regulatory concerns, faster than anticipated access line loss, slower DSL growth.
Price target: $10