Morgan Stanley upgraded its investment recommendation on shares of Cox Communications (COX) to strong buy from outperform.
Analyst Richard Bilotti says he is upgrading Cox because his $45 12-month price target for the stock implies nearly 40% return from yesterday's $32 close. He also believes the company has the best 2002 outlook among multiple system operators. Bilotti sees revenue growth in 2002 and 2003 of 14.5%-15% vs. pro forma growth of 13.8% in 2001. He says accelerating cable modem additions and continued growth in both residential telephonyand the digital cable business will contribute to the revenue growth pace. He also sees 2002 and 2003 EBITDA growth of 13.9% and 15.5%, respectively, vs. pro forma EBITDA growth in 2000 and 2001 of $10.3% and 11.8%.