Level 3 Communications
Cowen moved this company to the number two position of its top high conviction picks. Level 3 Communications Inc. (NYSE: LVLT) provides local, national and global communications services to enterprise, government and carrier customers. The company serves customers in more than 500 markets in over 60 countries over a global services platform anchored by owned fiber networks on three continents and connected by extensive undersea facilities.
Level 3’s comprehensive portfolio of secure, managed solutions includes fiber and infrastructure solutions; IP-based voice and data communications; wide-area Ethernet services; video and content distribution; and data center and cloud-based solutions.
While the company reported better-than-expected third-quarter numbers, Cowen feels that growth should continue in the fourth quarter. The firm reset numbers in line with management guidance, but continues to believe that the current entry point for the stock is very compelling, and the long-term thesis for the company remains unchanged. Cowen also feels the company may address a stock buyback plan next year.
The $64 Cowen price target is higher than the consensus target of $60.33. Shares closed on Tuesday at $50.76.
This top stock has been cut almost in half from highs posted earlier this year and investors may have an awesome entry point at current levels. Rackspace Hosting Inc. (NYSE: RAX) is the self-described number one managed cloud company. It helps businesses tap the power of cloud computing without the challenge and expense of managing complex IT infrastructure and application platforms on their own. Rackspace engineers deliver specialized expertise on top of leading technologies developed by AWS, Microsoft, OpenStack, VMware and others, through a results-oriented service known as Fanatical Support.
Rackspace reported very solid third-quarter results, including revenue and EBITDA that beat Wall Street expectations, largely driven by some previously announced enterprise business that was pushed into the third quarter and slightly higher seasonal growth within its public cloud business. The company also reaffirmed 2015 revenue and EBITDA margin guidance, but it did narrow fourth-quarter revenue growth guidance due to the better-than-expected numbers posted in the third quarter.
The Cowen price target is a whopping $52, while the consensus target is much lower at $39.47. Shares closed Tuesday at $26.17.
The demand for fiber, storage, delivery and latency is only going to increase. With Alphabet making a huge push into programming and the ISP world with its Google Fiber, plus major carriers increasing Internet speeds, the need will only increase. Cowen’s top stocks to buy should be right there when more orders continue to roll in.