AUSWR
The Association of U S West Retirees
 

 

 

2 analysts downgrade Qwest stock

The shares are rising, but critics cite competition and weak finances. Qwest says it will

continue to improve.

By Beth Potter, Staff Writer

Denver Post

Thursday, January 5, 2006

While Qwest Communications' stock continues to rise, some analysts are questioning giddiness over the telephone company's improved balance sheet.

At least two analysts downgraded their Qwest stock ratings Wednesday, less than two months after several feted it in November based on third-quarter news that the Denver-based company was improving its cash flow and its bottom line.

"We believe the shares trade at an unwarranted premium to peers," Todd Rosenbluth, Standard & Poor's equity research analyst, said in a report released Wednesday.

UBS analyst John Hodulik said Wednesday there are "several positives" to Qwest's business, but he is troubled by future competition from other telephone and cable providers.

"We believe growth opportunities to be limited past 2006," Hodulik said, downgrading shares to "neutral 2" from "buy 2".

Qwest spokesman Bob Toevs declined to address the criticism, saying only that the former Baby Bell will "continue to execute strategies that improve our operations, strengthen our balance sheet and reduce our debt."

Qwest is the dominant phone company in Colorado and 13 other Western states.

Janco Partners analyst Donna Jaegers in Denver also lauded the company for its debt restructuring but said it is still relatively weak.

"Unless Qwest does something strategic that changes its fortune, it will be vulnerable to increasing competition from Comcast rolling out phone service in this area," Jaegers said.  "The best they can do is hold their own."

Qwest stock closed at $5.44 Wednesday, a 15 percent increase in value from its $4.66 stock price when third-quarter earnings were announced Nov. 1.

Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.

http://www.denverpost.com/business/ci_3372629