CS First Boston Ups MCI to Neutral

Analyst Ido Cohen cites better-than-expected cost control and an improved outlook for the telecom

CS First Boston upgraded MCI (MCIP ) to neutral from underperform.

Analyst Ido Cohen says MCI's second quarter is significantly better than expected, with $5.236 billion in revenue, vs. his $5.147 billion estimate. Also, normalized EBITDA of $654 million was well above his $415 million estimate.

Cohen says EBITDA upside was driven by lower-than-expected selling, general, and administrative expenses related to a change in bad debt allowance, the reduction in consumer acquisition expenses, and better-than-expected savings from headcount reductions. He raised the 2004 estimates to $20.7 billion in revenue and $2.4 billion in EBITDA. For 2005, he upped the estimates to $18.9 billion in revenue and $2.5 billion in EBITDA.

Also, Cohen says he upgraded the stock on better-than-expected cost control at MCI, and improved outlook, and expected dividend yield support.

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