analysts downgrade Qwest stock
shares are rising, but critics cite competition and weak
finances. Qwest says it will
By Beth Potter, Staff Writer
Thursday, January 5, 2006
While Qwest Communications' stock continues to rise, some
analysts are questioning giddiness over the telephone
company's improved balance sheet.
At least two analysts downgraded their Qwest stock ratings
Wednesday, less than two months after several feted it in
November based on third-quarter news that the Denver-based
company was improving its cash flow and its bottom line.
"We believe the shares trade at an unwarranted premium to
peers," Todd Rosenbluth, Standard & Poor's equity research
analyst, said in a report released Wednesday.
UBS analyst John Hodulik said Wednesday there are "several
positives" to Qwest's business, but he is troubled by future
competition from other telephone and cable providers.
"We believe growth opportunities to be limited past 2006,"
Hodulik said, downgrading shares to "neutral 2" from "buy
Qwest spokesman Bob Toevs declined to address the criticism,
saying only that the former Baby Bell will "continue to
execute strategies that improve our operations, strengthen
our balance sheet and reduce our debt."
Qwest is the dominant phone company in Colorado and 13 other
Janco Partners analyst Donna Jaegers in Denver also lauded
the company for its debt restructuring but said it is still
"Unless Qwest does something strategic that changes its
fortune, it will be vulnerable to increasing competition
from Comcast rolling out phone service in this area,"
Jaegers said. "The best they can do is hold their own."
Qwest stock closed at $5.44 Wednesday, a 15 percent increase
in value from its $4.66 stock price when third-quarter
earnings were announced Nov. 1.
Staff writer Beth Potter
can be reached at 303-820-1503 or