Telephone and Data downgraded to Neutral from Buy at Citi

Citi analyst Michael Rollins downgraded Telephone and Data to Neutral from Buy with a price target of $8, down from $14. The analyst believes the telecommunication industry’s historical use of lead sheathed cabling is likely to remain an overhang for the stocks and valuations for at least a few months and potentially longer until the market can better measure the financial risk. As a result, Citi downgraded three telecommunications operators. Copper network deployed with possible lead sheathing could be a significant percentage of the legacy network deployed nationally with varying exposures for each company, the analyst tells investors in a research note. The firm says it is unable to specifically quantify financial risks for wireline telcos from the concerns raised by the Wall Street Journal articles. Citi believes most of the wireline telcos will be subject to a valuation discount based on its current scenario analysis. It remains concerned for further near-term downside risk and views the uncertainty as an overhang for the time being.