Covad Communications Shares Jump
Monday April 10, 12:26 pm ET
Covad Communications Group Shares Climb As Analyst Issues Upbeat Report
NEW YORK (AP) -- Shares of Covad Communications Group Inc. jumped Monday as an analyst saw short-term catalysts driving the stock higher and called the telecom services company a likely acquisition target.
Jefferies analyst Romeo A. Reyes boosted his target price to $3 from $2 and reiterated a "Buy" rating on the stock, saying Covad's line-powered voice technology business "enhances the depth, breadth and quality" the company's product portfolio.
Line-powered voice, or LPV, allows Covad to offer phone service, high speed Internet access and video "over a twisted pair of copper wires," the analyst wrote in a note to clients.
In March, the San Jose, Calif., company signed a deal with Internet service provider Earthlink Inc., receiving $50 million in financing pay for the expansion of its voice services to eight new markets. Reyes said the agreement "further validates" the quality of Covad's nationwide network.
Shares rose 19 cents, or 9.1 percent, to $2.29 in midday trading on the American Stock Exchange. The stock has more than doubled in value since closing at 87 cents on Jan. 3, the first trading day of the year.
The analyst also called the company an "even more likely acquisition target" thanks to the launch of its LPV technology.
"The LPV product would enable the acquirer to differentiate its product offering from the competition and control the Company's nationwide network," Reyes wrote.