UPDATE: Citi Initiates Coverage On Zayo Group

Citi initiated coverage on Zayo Group Holdings Inc ZAYO Wednesday with a Buy rating and $30 price target.

Analysts led by Michael Rollins noted that they “are upbeat on the demand prospects for metro-fiber assets more broadly for the telecom category based on the growing need for high bandwidth connections to corporate buildings, data centers, & wireless towers and believe Zayo is well positioned to take share.”

“Zayo’s network connects to 15,700 buildings, towers, and data centers across 319 markets largely in the U.S.,” according to the analyst report.

“We believe the future growth prospects of Zayo's business model are being heavily discounted, trading at around 11x our CY15 estimate of AFFO. At a FV/OIBDA of below 11.5x, Zayo is trading at a discount to Cogent (at 14x) and above Level 3 at 10x our CY15 estimates, and we believe the growth in revenue and cash flow supports multiple expansion for Zayo to 12-13x,” according to Rollins.

Morgan Stanley also initiated coverage Wednesday with an Overweight rating.

Zayo Group  recently traded at $26.78, up 4.6 percent.