SBC Communications "market perform"

06/23/04 - Morgan Keegan

NEW YORK, June 23 (New Ratings) – Analysts at Morgan Keegan reiterate their "market perform" rating on SBC Communications (SBC).

SBC Communications is a leading provider of a range of voice, data, networking and e-business services.

According to Morgan Keegan’s research note published this morning, SBC Communications has achieved a breakthrough in its strategy to offer networks capable of providing state-of-the-art digital TV, high speed broadband and VoIP services. The program, to be implemented over the next five years, necessitates a cost outlay of $4-6 billion, the analysts add. Morgan Keegan believes the investment would be accretive to the company’s earnings over the longer-term.

SBC Communications’ cash flows are expected to decline by $1 billion annually, according to Morgan Keegan. The company would, however, still be in a position to pay dividend, the analysts believe. SBC Communications’ market share is expected to increase over the longer term, Morgan Keegan mentions.

The EPS estimates for 2004 and 2005 are $1.28 and $1.05, respectively. The P/E estimates for 2004 and 2005 are 19.1x and 23.2x, respectively.

Morgan Keegan reiterates its "market perform" rating on SBC Communications.