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Potential Upside For Our Fibernet Telecom (FTGX) Estimates

Posted on March 6, 2007

This morning Fibernet Telecom (FTGX) announced a colo expansion at 60 Hudson Street in New York City. Since the company was quickly reaching full capacity in its existing colo space, we view this news as very significant, in that it has the potential to provide significant revenue and EBITDA growth, over and above our existing 2007 projections for the company. Importantly, FTGX funded this expansion with existing cash balances and did not take on any additional credit.

We will need to wait for the company’s fourth quarter 2006 results, expected to be released later this month, before fully revising our 2007 and 2008 estimates to reflect this increased colo space. However, we now are more confident in our initial assumptions for fiscal 2007 where we have the company reporting revenues of $50 million and EBITDA of $8 million. Notwithstanding FTGX’s above-average expected EBITDA growth in 2007, simply using the average industry EV/EBITDA multiple of 15X, implies an upside price target of $12+ for FTGX shares, assuming the company meets our projections. However, upside could be more significant should our estimates prove to be too low.

Note: We own shares in FTGX, and first recommended them to paid subscribers at $4.30 per share. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.

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Disclaimer:
This site may include market analysis and we may own shares in the stocks mentioned in our reports. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.

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