Uniti stock rating lifted to Strong Buy at Raymond James

On Monday, Uniti Group (NASDAQ:UNIT) stock received an upgrade in its rating from Raymond (NSE:RYMD) James, with analyst Frank Louthan moving the telecommunications service provider from Outperform to Strong Buy. In conjunction with the rating upgrade, the firm also raised its price target on the stock to $8.00 from the previous $6.00. Currently trading at $5.62, InvestingPro analysis suggests the stock is undervalued, with the company’s attractive EV/EBITDA multiple of 8x supporting the bullish stance.

The upgrade comes as Uniti Group nears the completion of its merger with Windstream, expected to finalize within the next four to five months. Louthan’s optimism is based on the potential for Uniti to emerge as a significant player in the Fiber-to-the-Home (FTTH) market, similar to the success seen by Frontier Communications (OTC:FTRCQ).

Louthan expressed confidence in the long-term prospects of Uniti’s FTTH, commercial fiber, and leasing business. The merger with Windstream is anticipated to be a value-creating move for shareholders, as Louthan suggests that those willing to "look through the noise" will recognize the underlying value.

The positive outlook for Uniti Group’s stock is tied to the broader industry trend towards FTTH technology, which is increasingly seen as essential for future telecommunications infrastructure. The analyst’s statement underscores the belief that the merger will enhance Uniti’s positioning in this growing market segment.

Uniti Group’s stock movement on Monday reflects the market’s reception of the upgrade and revised price target. The company’s strategic steps towards completing the merger with Windstream appear to be aligning with Raymond James’ analysis of its potential to become a "diamond in the rough" within the FTTH space.

In other recent news, Uniti Group Inc. reported its fourth-quarter 2024 earnings, slightly missing expectations with an earnings per share (EPS) of $0.09 compared to the forecasted $0.10. The company’s revenue also came in slightly below projections at $293.32 million, missing the anticipated $295.12 million. Despite these minor shortfalls, the company emphasized its strategic focus on fiber infrastructure and an upcoming merger with Windstream as key growth drivers. The merger is anticipated to enhance Uniti’s market position, with a shareholder vote set for early April. Analyst firms have not indicated any recent changes in their ratings for Uniti Group, but the company’s strategic initiatives continue to bolster investor confidence. Uniti’s management expressed optimism about future cash flow, projecting to be free cash flow positive in 2025. The company also highlighted its plans to expand its Fiber to the Home (FTTH) initiative, aiming to reach 2 million homes by the end of 2025. These developments reflect Uniti Group’s ongoing efforts to strengthen its market position and financial performance.

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