Monday, October 25, 2010

Morgan Stanley Remains Concerned That Revenues For Equinix Could Slow


>>Morgan Stanley analysts remain concerned that Equinix Inc.'s revenues could slow materially given substantially higher churn risk from large customer deployments outside of key ecosystems.
Analysts Simon Flannery and Edward Katz said, "Although management sized the potential impact of turnover at 25% of the base in North America, visibility on customer vertical and geographic mix remains lacking. Additionally, integration issues surrounding soft Switch and Data bookings are unresolved. Unlike consensus, we continue to believe that FCF burn is likely through 2011. Despite the stock's valuation (apart from the credit crisis) at historical trough levels of 7.3x our 2011E EBITDA, we view EQIX as a show me story."
The bank maintained its equal-weight rating on the stock. Morgan Stanley sees fiscal 2010 EPS of $1.01, vs. consensus estimates of $0.95 per share, and fiscal 2011 EPS of $2.17, vs. consensus estimates of $2.25 per share.

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