CenturyLink's stock extends bounce of 2-decade low after analyst upgrade

Shares of CenturyLink Inc. rallied 2.6% in morning trade Tuesday, extending their bounce off last week's 22-year closing low, after MoffettNathanson analyst Nick Del Deo upgraded the communications services company, citing a "sufficiently compelling" valuation following the recent price plunge. Del Deo raised his rating to neutral from sell, but cut his target to $12 from $16. The stock had closed Thursday at $12.78, the lowest level since May 1997, after the company slashed its dividend by more than half. "There's a strong argument to be made that CenturyLink is a long term structural short and the stock is likely to grind lower as the 'Corporate Reaper' comes closer: its revenue losses continue apace; those revenue losses will translate into bottom line erosion; realizing anticipated cost savings carries execution risk; and it still carries a significant debt burden," Del Deo wrote in a note to clients. That said, from a risk-reward perspective, we don't see the current price as sufficiently compelling as to continue to warrant a Sell rating, and therefore are upgrading the shares to Neutral." The stock has tumbled 26% over the past three months while the S&P 500 has gained 3.1%.

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