Covad (DVW)

[lulubado]

Wednesday, March 31, 2004 6:39:06 AM ET
Kaufman Brothers

NEW YORK, March 31 (New Ratings) - Analysts at Kaufman Brothers upgrade Covad Communications (COVD) from "hold" to "buy." The target price is set to $4.

Shares of Covad Communications, a provider of digital communication networking and firewall technologies, are currently trading at $2.21.

According to Kaufman Brothers' research note published yesterday, the company's share price recently witnessed a sharp decline. The company is likely to regain its reselling contract with AOL in the near future, the analysts say. Covad Communications’ contract with AT&T offers more visibility into the company’s growth prospects, the analysts add.

According to Kaufman Brothers, Covad Communications is expected to close its GoBeam acquisition by the end of May. The company expects its VoIP segment to contribute meaningfully to earnings growth in the long term, the analysts say. The current overhang on the company's stock is on account of UNE-P related regulatory issues, the analysts mention. Since Covad Communications is a facilities-based provider, UNE-P related regulatory outcomes are unlikely to affect the company’s growth prospects, Kaufman Brothers believes.

The EPS estimates for 2004 and 2005 are -$0.24 and -$0.06, respectively.

Kaufman Brothers upgrades Covad Communications from "hold" to "buy."

© 2004 New Ratings