CenturyLink, Inc. (CTL)

We are upgrading our recommendation on CenturyLink, Inc. (CTL - Analyst Report) to Outperform on the back of synergies expected from the Embarq, Qwest and Savvis acquisitions. The company's bottom line met the Zacks Consensus Estimate but revenue more than doubled during the quarter.

Although the acquisitions would increase the company's operating cost and debt, they would provide excess synergies going forward and boost the company's competitive position. Furthermore, CenturyLink's sustained focus on investing in four areas broadband expansion, fiber cells, cloud computing and Prism TV to expand network capacity, and improving returns to its shareholders through healthy dividend payouts inspires our optimism.

The company believes the Qwest and Savvis acquisitions will significantly enhance CenturyLink's position as a global communications leader and strengthen its ability to drive long-term shareholder value. Hence, we have an Outperform rating with the price target of $42, based on 19.5x our earnings for 2011.

CenturyLink, Inc. (CTL) : FULL ANALYST REPORT

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