Array Digital, TDS Stocks Fall on Raymond James Downgrade

Array Digital and TDS Stocks Fall After Downgrade

Shares of Array Digital Infrastructure (NYSE:AD) and Telephone and Data Systems (NYSE:TDS) declined 5.7% and 3% respectively on Monday. The fall was triggered by a Raymond James downgrade to "Market Perform" from "Outperform," with the analyst citing that the stocks are now fairly valued.

Rationale Behind the Rating Change

The re-evaluation follows a proposal by the companies to collapse their two-stock structure, a move the analyst believes has unlocked their hidden value. While Array Digital had a strong Q1 2024, TDS saw a slower start, with legacy copper revenue pressures partially offsetting its 32% year-over-year growth in residential fiber net additions.

Outlook and Key Factors

The market has reacted to the sentiment that potential gains from strategic shifts are already priced in. Investors will watch Array Digital's ongoing spectrum sales to T-Mobile and Verizon. For TDS, focus remains on fiber expansion and integrating its acquisition of Granite State Communications while navigating its lowered revenue guidance for 2024.

FAQ

Q: Why were AD and TDS stocks downgraded?
A: Raymond James downgraded the stocks to "Market Perform," believing they are now fairly valued after strategic actions unlocked their intrinsic worth.

Q: What is the outlook for these companies?
A: Array Digital is focused on completing major spectrum sales, while TDS is expanding its fiber network to counter revenue declines in its legacy business.

Source: Investing.com