Wednesday, October 27, 2010

Color On Quarter

from, by Notable Calls:

>>- Cowen reits Outperform noting quarterly revenue and EBITDA results were slightly above reduced guidance Equinix issued on October 5, however they were more encouraged with initial 2011 revenue and EBITDA guidance of >$1.500B (Street: $1.491B) and >$675MM (Street: $660MM).


- Deutsche reits Buy and $100 target saying their overall takeaway from full 3Q results is that this should help investors begin to get more comfortable that the 3Q miss was company specific and fixable. The company did a good job on the call providing further clarity into the issues (churn, pricing) and provided 2011 guidance that was ahead of expectations. As a result, they are raising their forecasts and reiterate their Buy and $100 target.


- Morgan Stanley is a bit more cautious on the name saying that despite better than expected MRR / cabinet results, they see risks to 2011 EBITDA guidance on higher churn (set to average 2.7% in 2H) and expense pressures. While management's plan to address SDXC was encouraging, they believe that efforts may be in their early stages, with a turnaround unlikely until mid-2011.


- Piper reits OW & $110 target noting Equinix is beginning to make the transition from a high growth company to one focused on balanced growth and free cash flow generation. They believe management is now focused on free cash flow generation with growth layered on top. As the firm noted in their October 21 note ("What Is Equinix Worth?...), they estimate that valuing the free cash flow generation could yield to a 2012 valuation of $108.

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