Centurylink is able to improve revenue trends, particularly stabilizing legacy service revenue declines, the firm noted.
Bonus depreciation rules are made permanent, lowering the risk of higher cash taxes, and helping dividend sustainability, according to the analyst note.
However, Jefferies analysts lowered price target, saying "we believe the consumer and SMB segments will require a more meaningful and immediate capital investment to keep pace with consumption and cable competition."
Carriers with significant copper-based offerings are likely to lose share at an accelerating pace, the firm added.
CenturyLink, based in Monroe, LA, is an integrated communications company that is engaged in providing an array of communications services to residential, business, governmental and wholesale customers.
Shares of Centurylink are gaining 2.77% to $28.96 in afternoon trading Friday.
TheStreet Ratings team rates CENTURYLINK INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CENTURYLINK INC (CTL) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and generally higher debt management risk.