Why GTT Communications Stock Popped Today

What happened

Shares of GTT Communications (NYSE: GTT) are up 18.1% as of 1:45 p.m. EST Wednesday, after the telecommunications company enlisted the help of two financial advisory firms to explore the sale of its infrastructure division.

So what

In a press release late yesterday, GTT said it has hired Credit Suisse and Goldman Sachs as financial advisors for the potential sale, which would include its pan-European fiber network, as well as the subsea transatlantic fiber and data center infrastructure it obtained through its acquisitions of Interoute in 2018 and Hibernia in 2017.

White jigsaw puzzle with an edge piece being removed


To be fair, this shouldn't be entirely surprising. Just over two weeks ago -- when GTT shares plunged following the release of the company's disappointing quarterly results -- management revealed they had expanded plans to divest nonstrategic and noncore assets to include the aforementioned infrastructure.

Now what

Nonetheless, GTT CEO Rick Calder called the move to hire financial advisors "an important step" in the process, adding: "This potential divestiture in no way alters the execution of GTT's core strategy of providing cloud networking services to large and multinational clients as we deliver on our purpose of connecting people to any location in the world and to every application in the cloud."

In fact, as I suggested earlier this month, the divestitures should help streamline GTT's operations, and improve its financial position as it works back toward achieving sustained, profitable growth. With those plans taking a big step forward yesterday, shares are understandably rallying today in response.

10 stocks we like better than GTT Communications
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and GTT Communications wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of June 1, 2019


Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More