FYBR - Frontier Communications tickers higher amid new long idea at Hedgeye

2023-03-29 09:26:57 ET

Frontier Communications ( NASDAQ: FYBR ) rose 2.3% in premarket trading after Hedgeye named it a new long idea with upside to $40 a share over the next 12 to 24 months.

"The stock has come under pressure on concerns that a slower pace of fiber builds and heightened competition (FWA + Cable) will weigh on profitability/FCF targets," Hedgeye analyst Andrew Freedman wrote in a note on Wednesday. "Ultimately, we believe these concerns will prove short-sighted."

Hedgeye sees the risk reward in Frontier ( FYBR ) as particularly attractive at $20 share with upside to $40 a share in its base case scenario.

"Underlying our thesis is the fact that fiber / FTTH is the best technology with superior unit economics to cable," Freedman wrote. "Our internal surveys suggest that when a consumer is faced with a choice of fiber or cable, fiber wins 68% of the time - and that fiber has pricing power over cable and FWA."

Hedgeye is hosting a presentation on Frontier ( FYBR ) next Thursday.

Frontier ( FYBR ) short interest is 11%.

The long call from Hedgeye comes after Frontier ( FYBR ) shares slide 9% on Monday after Morgan Stanley downgraded the stock to underweight,  highlighting its premium valuation to its telecom peers alongside some execution risks.

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