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Can a Data Center Sale Really Help Windstream Shares Double?

Windstream Holdings, Inc. (NASDAQ: WIN) is a very controversial stock, and many investors and analysts simply do not like the stock at all – whether it has a high dividend yield or not. A report on Monday from Merrill Lynch is talking up the potential valuation here after its announced sale its data center business to TierPoint in an all cash transaction for $575 million.

What stands out here is that Merrill Lynch is the most optimistic of all Wall Street analysts by far when it comes to Windstream. Their most optimistic rating and target comes with a price objective that is all the way up at $16.00 on a sum of the parts analysis. What investors need to consider is that a sum-of-the-parts analysis is not generally the same as an earnings or cash flow analysis, and these are often valuing parts or assets of a business very different from how other investors see things.

David Barden and Joshua Frantz, the analysts making the call on Monday, pointed out that Windstream will maintain a partnership with TierPoint. Keeping that relationship will allow Windstream to continue to sell data center products to its customer base.

The...


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