Covad Shares Up After Upgrade
Monday March 20, 2:09 pm ET
Covad Communications Shares Climb After Analyst Upgrades the Stock on Expense Controls
NEW YORK (AP) -- Shares of Covad Communications Group Inc. climbed to a 52-week high Monday, after an analyst upgraded the communications service provider and said the company's management continues to aggressively manage costs, steering it toward profitability.
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Needham analyst Greg Mesniaeff upgraded the San Jose, Calif., company to "Buy" from "Hold," and said in a client note he is "increasingly convinced" the company will execute its goal of posting positive earnings before interest, taxes, depreciation and amortization -- known as EBITDA, an indicator of financial performance -- in the third quarter.
"We also believe that Covad's deepening ties with Internet service providers such as EarthLink could potentially expand to other major portals," the analyst added. Covad had said last week it received $50 million in financing from Earthlink Inc. to fund the expansion of its voice services to new markets.
Covad shares climbed 20 cents, or 11 percent, to $1.94 in afternoon trading on the American Stock Exchange. In the past 52 weeks, the stock has changed hands between 65 cents and $1.80.
The company's technology uses existing telephone lines to provide broadband Internet access, and its main clients are Internet service providers. Mesniaeff added the company is one of the few providers of alternative telecommunications broadband infrastructure.
