In a note to investors UBS downgraded Windstream to "sell" from "neutral" and lowered its price target for the company to $5 from $11.50, according to Street Insider.
Analyst Batya Levi said that Windstream shares were recently pressured by dividend-coverage concerns, its relationship with Communications Sales & Leasing CSAL, and worsening fundamentals. The analyst expects declining revenue and EBITDA to continue weighing on the company's shares.
"We believe WIN's remaining CSAL stake is key to covering the dividend and a lack of improvement in the underlying fundamentals could push the payout back to unsustainable levels," Levi wrote. "While this could be addressed with a lower capex level, we believe capital intensity needs to remain at mid-teens to drive better revenue trends. Meanwhile, we estimate WIN's leverage will be ~3.6x (after the CSAL stake) vs. mgmt's target for 3.0x."
WIN data by YCharts