D.A. Davidson Initiates Coverage On Zayo Group

On Thursday, D.A. Davidson analysts initiated coverage on Zayo Group Holdings Inc (NYSE: ZAYO) with a Buy rating and $29 price target.

James Moorman outlined the reasons for the bullish initiation.

• Strong data/bandwidth growth continues.
• Dark fiber/Lit services growth
• Tranzact system helps efficiency and demand visibility; “Tranzact accounts for roughly 30% of bookings, but could increase to roughly 50%-60% over time.”
• Opportunistically acquisitive; the company has completed 32 acquisitions in the past seven years.
• Zayo is highly leveraged, “Zayo ended FY2014 with $3.2 billion in long-term debt, net debt of $3.0 billion, and is levered at 4.5x debt to EBITDA.”

Shares of Zayo Group closed Thursday’s session at $23.58, down 1.91 percent.