CenturyLink stock downgraded to $24 by Jefferies on fears of pending data center sale

CenturyLink's (NYSE: CTL) stock was downgraded by Jefferies to $24 over concerns that the pending sale of its data center may not fetch a large enough price.  

Jefferies also downgraded the company's stock from "hold" to "underperform."

"We take a more cautious view on long term margins based on our cost analysis and bearish view on revenue stabilization. We believe the anticipated data center sale is likely to disappoint while the dividend payout could climb to levels once unacceptable to the company," the firm said in an analyst note.

Although CenturyLink's shares rose following strong fourth quarter earnings, Jefferies said the company will "underperform in a more risk-on environment, particularly given secular challenges."

CenturyLink has been looking at various options for its data center business. The company has not made any specific decision yet about the division, but it did confirm that a number of parties are interested.

"We spoke to a number of interested parties who expressed interest in all options ranging from an outright purchase of our data centers and colocation business, a partnership and/or a joint venture," said Glen Post, CEO of CenturyLink during the earnings call, according to a Seeking Alpha transcript. 

CenturyLink also created a separate data center/colocation organization, including a separate management team.

In November, CenturyLink told investors during its third quarter earnings call a similar story: that it was looking at various opportunities for its data center and colocation business operations and considering a number of options for this segment. The provider could also keep some or all of these assets and operations as part of CenturyLink's portfolio.

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