Zayo Group Holdings Received its Third Buy in a Row

After Raymond James and Deutsche Bank assigned a Buy rating to Zayo Group Holdings in the last month, the company received another Buy, this time from Oppenheimer. Analyst Timothy Horan maintained a Buy rating on Zayo Group Holdings (NYSE: ZAYO) today and set a price target of $42. The company’s shares closed yesterday at $35.24.

Horan commented:

“Organic revenue growth accelerated to 5% in Zayo’s F3Q18, from 4% in F2Q, driven by record bookings and churn. Growth should accelerate to 6%+ by year-end. Fiber solutions have been the catalyst as large enterprises/carriers/webscale companies support OTT/Cloud. Margins declined on difficult comparisons, but should trend up from here on higher fiber/colo rev. mix. Management has made REIT conversion a top priority, and we expect a conversion at YE and that it will drive EBITDA multiple expansion. The fiber industry should benefit from consolidation, and we see Zayo as a potential target for other shared infrastructure companies. It also announced the resignation of COO Andrew Crouch, but noted his departure was not related to company performance, but we feel it is a negative.”

According to TipRanks.com, Horan is a top 100 analyst with an average return of 15.1% and a 72.9% success rate. Horan covers the Technology sector, focusing on stocks such as Interxion Holding NV, Boingo Wireless Inc, and GTT Communications.

Currently, the analyst consensus on Zayo Group Holdings is Strong Buy and the average price target is $42.57, representing a 20.8% upside.

In a report issued on April 20, Barclays also maintained a Buy rating on the stock with a $42 price target.

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Based on Zayo Group Holdings’ latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $649 million and quarterly net profit of $23.4 million. In comparison, last year the company earned revenue of $550 million and had a net profit of $27 million.

Based on the recent corporate insider activity of 87 insiders, corporate insider sentiment is negative on the stock.

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Zayo Group Holdings, Inc. provides bandwidth infrastructure services in the U.S. and Europe. Its products and services enable mission critical, high-bandwidth applications, such as cloud-based computing, video, mobile, social media, machine-to-machine connectivity, and other bandwidth-intensive applications.