UBS Projects Growth for Frontier Communications (FYBR)

Frontier Communications Parent stock (NASDAQ: FYBR) saw a moderate drop of 1.75% in trading yesterday to end the day at $27.59. The downward movement comes as UBS has initiated coverage with a positive perspective, issuing a Buy rating and a $33 price target for the telecom company.

The forecast is grounded in Frontier's escalating role as a growing fiber provider, which is expected to constitute the bulk of its revenue and EBITDA in the near future.

UBS has high expectations for Frontier’s future, predicting that fiber will account for 65% of the company's revenues and 75% of its EBITDA over the next three years. This growth in the fiber sector is anticipated to spur accelerating company growth overall. With EBITDA expected to speed up, a pathway to free cash flow breakeven in sight, and the strategic value of fiber on the rise, UBS views the current risk/reward profile of Frontier's shares as appealing for investors.

Frontier Communications, based in Dallas, Texas, is a key player in the Communication Services sector, delivering a variety of high-tech communication and technology services throughout the United States. The company's offerings include broadband, voice, and video services, as well as comprehensive data and internet packages catering to large enterprises, small and medium businesses, and wholesale customers. Frontier, which underwent a corporate name change to Frontier Communications Parent, Inc. in April 2021, positions itself as a challenger in the industry it has long been a part of since its establishment in 1935.

The company carries a market capitalisation of approximately $6.86 billion and has experienced a 52-week range from $13.66 to $28.44. On the trading floor, Frontier opened at $27.76, fluctuating between a low of $27.44 and a high of $28.07, settling close to the mid-point of its annual range. Although earnings data reveals a high trailing P/E ratio of 250.82 and a negative forward P/E of -43.79, UBS's bullish stance indicates a belief in the company's turnaround potential and strategic focus on expanding its fiber service offerings.

No dividends are currently offered, reflecting the company's investment in growth strategies over shareholder payouts at this stage. With total revenues standing at $5.77 billion and a net income of $27 million, the financial standing of Frontier does show some positives and market watchers and investors are keen to see how Frontier's stock fares in the coming months.