Kaufman Brothers upgraded EarthLink (ELNK ) to hold from sell based solely on valuation.
Analyst Mark May says ELNK shares are off 20% since he downgraded them to sell on Jan. 27. At current levels, he thinks the valuation is too cheap to maintain a sell rating. He maintains a $7 fair value estimate, based on discounted cash flow analysis.
For 2004, May expects minimal revenue growth; continued subscriber losses in premium dial-up, though at an improving rate; and continued pricing pressure in broadband and premium dial-up. He also believes its PeoplePC business must double gross organic additions to hit guidance. He sees 35 cents for 2004 EPS.