Morgan Stanley Believes Equinix FCF Potential Still A Concern

from mysmarttrend.com:

>>Morgan Stanley continues to believe that Equinix Inc. will burn levered free cash through 2011 with their capex estimate materially higher than consensus, given an average capex per incremental cabinet assumption of about $51,000.
Analysts Simon Flannery and Edward Katz said, "Accounting for the benefit of $4.4 mn in integration costs that we had not factored into our estimate, results reflected a $2.6 mn beat vs. our estimates. New guidance for 2010 revenue ($1225-1235 mn) and EBITDA ($535-540 mn) implies EBITDA margins of 43.7%, suggesting YoY margin compression of 260 bps, a 70 bps improvement from prior guidance. Capex of $148.7 mn came in below our estimate of $191.1 mn, but still resulted in FCF burn of ($53.7 mn). We remain concerned that consensus capex for 2011 ($460 mn) is too low relative to the implied consensus pro forma top-line growth estimate (+17%)."