Dycom Upgraded At D.A. Davidson, 'Higher Growth Expected'

In a report published Thursday, D.A. Davidson analyst John Rogers upgraded the rating on Dycom Industries, Inc. (NYSE: DY) from Neutral to Buy, while raising the price target from $64 to $72. The company is expected to benefit from new entrant and existing competition for higher speed fiber.

"Following several quarters of better than forecast financial gains, Dycom raised its guidance for the fiscal fourth quarter ending July 31, 2015," Rogers reported.

The company has guided to revenue of $560-$570 million, up from the previous guidance of $550-$570 million, with EPS of $0.79-$0.87, from $0.74-$0.82 previously. Dycom Industries also announced that its previously authorized share repurchase worth $40 million has largely been completed, while a new buyback program for an additional $40 million has been authorized to be completed over the next 18 months.

In addition, according to the DA Davidson report, "A ramp up in spending by a variety of wireline communications providers intending to increase connectivity speeds to 1Gps or higher has led to stronger demand for Dycom's construction services… As the largest national provider of these services boasting good relationships with most operators, Dycom is leveraging this opportunity."

The earnings estimates for the company have been raised to reflect the improved growth momentum at Dycom Industries, as well as lower share dilution. The analyst expects upside to the share price due to the improved earnings prospects.