Frontier Communications Stock Rose on CEO Exit News

Frontier Communications (FTR) stock rose 3.4% on Wednesday. The stock rose following media reports about Frontier CEO Dan McCarthy’s exit. According to the reports, McCarthy would be replaced by Bernie Han, effective immediately.

According to a FierceTelecom report on December 4, “Rumors of McCarthy’s possible departure started to boil to the surface last month after Frontier reported weak third quarter results.” The report added, “Han brings more than 30 years of experience to Frontier, including more than 11 years at Dish Network, as well as an extensive background in finance. At Dish, Han served as CFO, COO and as executive vice president for strategic planning.”

Frontier’s Q3 results

Frontier Communications’ adjusted net loss attributable to its common shareholders increased to $16 million in the third quarter. In contrast, it reported a net loss of $7 million in the third quarter of 2018.

The company reported adjusted EPS of -$0.15 in the third quarter, wider than its adjusted EPS of -$0.07 in the third quarter of 2018. Analysts expected Frontier to post adjusted EPS of -$0.42 in the third quarter.

Frontier Communications generated total revenues of $2.0 billion in the third quarter, which was below the analysts’ consensus estimate of $2.02 billion. The company’s revenues decreased by 6.1% YoY (year-over-year) from $2.13 billion in the third quarter of 2018.

In the third quarter of 2019, Frontier Communications’ voice services revenues fell 7.2% YoY to $621 million. Its data and Internet services revenues fell 3.4% YoY to $928 million. The company’s video services revenues fell 6.2% YoY to $244 million.

Frontier’s video customers

In the third quarter, Frontier Communications lost a net 49,000 total video customers, which included 9,000 Dish Network customers. The company lost a net 37,000 total video customers in the third quarter of 2018, which included 8,000 Dish customers.

Frontier Communications’ total video customers fell 18.9% YoY to 0.88 million customers as of September 30. The reduction in video customers resulted from the growing popularity of online video streaming offerings such as Netflix and Hulu.

Frontier’s broadband customers

In the third quarter, on a net basis, Frontier Communications lost 71,000 broadband customers compared to net losses of 61,000 in the third quarter of 2018. Frontier’s broadband customers fell 6.5% YoY to reach 3.6 million at the end of September 30.

This decline is due to the migration of Frontier’s broadband subscribers to top US cable operators like Comcast (CMCSA) and Charter Communications (CHTR). Charter Communications added 351,000 residential broadband subscribers in the third quarter, while Comcast added 359,000 residential broadband subscribers.

Analysts’ recommendations

Wall Street analysts are bearish on FTR stock. Of the nine analysts covering the stock, seven rated it as a “sell” or “strong sell.” The remaining two analysts rated it as a “hold.” The analysts’ mean target price for FTR is $0.77. This target price implies an upside potential of 14.9% from its current price of $0.67.

Stock returns

On December 4, Frontier Communications stock closed at $0.67. This closing price was 29.8% above its 52-week low of $0.52 and 80.9% below its 52-week high of $3.50. The stock fell 71.9% year-to-date as of December 4.

Frontier stock has reported returns of 3.3% in the trailing five days and -31.7% in the trailing month. The stock has lost 80.5% in the trailing 12 months.

Frontier Communications stock closed 4.3% below its 20-day moving average of $0.70 yesterday. However, the stock was 22.1% and 28.7% below its 50-day and 100-day moving averages of $0.86 and $0.94, respectively. With a 14-day RSI score of 40, FTR stock is currently neutral.

On December 4, Frontier stock closed near its Bollinger Band midrange level of $0.70. This suggests that the stock is neither overbought nor oversold.