The firm set a $6.50 price target on the stock.
DA Davidson said the communications company's recent offer of $750 million in equity and $1.75 billion in mandatory convertible preferred stock has removed an overhang.
"The equity has a green shoe of $75 million and the convertible preferred stock has a green shoe of $175 million. Proceeds from the offering, along with debt financing to come later, will finance FTR's purchase of access lines from Verizon (VZ) in FL, TX, and CA that is expected to close in [the first half of 2016]," the firm said in an analyst note.
"We believe the high short interest could lead to a short covering following the deal. While CT was weak in Q1, we expect continued improvement throughout the year and still see the Verizon deal as favorable, despite a lower share price," the firm added.
Frontier Communications is a Stamford, CT.-based communications company that provides services mainly in rural areas and small to medium sized towns and cities in the U.S.
Separately, TheStreet Ratings team rates FRONTIER COMMUNICATIONS CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate FRONTIER COMMUNICATIONS CORP (FTR) 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 revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."