Shares of CenturyLink, Inc. (NYSE:CTL) moved higher on Monday after activist investor Corvex Management LP voiced bullish support for the telecommunications company.
Speaking at the illustrious Sohn Investment Conference in New York on Monday, Corvex’s Keith Meister said he thinks CenturyLink’s stock has a 43% upside. The newly-positive take from the hedge fund that owns roughly 5.5% of CenturyLink has sent its stock price up 4.43% to $24.65 per share.
Meister’s confidence in CenturyLink stems from his faith that Level 3 Communications, Inc.’s (NYSE:LVLT) executive board can lead the company forward.
In Nov. 2016, CenturyLink announced it is scheduled to acquire Level 3 in a $34 billion cash and stock transaction. The deal isn’t expected to close until September. As of now, CenturyLink CEO Glen Post would run the combined company, with Level 3’s CEO gaining a position on the board.
But in Meister’s mind, the only way the deal will prove to be truly beneficial is if Level 3’s CEO Jeff Storey takes on a leading role in the soon-to-be merged company.
“Execution has been substantially weaker at CenturyLink than at Level 3 for many years,” Meister said at the Sohn Investment Conference Monday. Meister also said the deal will give CenturyLink more exposure to business clients, which currently accounts for two-thirds of its revenue, and boost its free-cash flow.
“I’ll say it simply, if you bought the New England Patriots, you’d start Tom Brady, right?” Meister said on CNBC. “Let’s get our best athletes on the field.”
Meister hopes Storey will get an executive role of some sort before being named CEO sooner-than-later. The activist investor wants both current CEOs to play a large role in the business now before CenturyLink’s Post eventually hands over the keys to Level 3’s Storey.
CenturyLink’s stock has slowly fallen since December 2014 when it was trading at roughly $40 per share to its current, almost two-decade low. The struggling telecommunications company is a Zacks Rank #3 (Hold).
Level 3’s stock has skyrocketed from its 2011 depths of $1.49 per share to its current $59.39 price. The company has seen its stock price jump 3% on Monday. Level 3 is a Zacks Rank #3 (Hold).
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Level 3 Communications, Inc. (LVLT): Free Stock Analysis Report
CenturyLink, Inc. (CTL): Free Stock Analysis Report
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