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Piper cautious on rural telephone providers CenturyLink, Windstream

Rural telephone service providers CenturyLink (CTL) and Windstream (WIN) are declining after research firm Piper Jaffray downgraded both stocks in notes to investors earlier today. CenturyLink, which was downgraded to Neutral from Overweight, has little opportunity to reduce costs through acquisitions, as it has done in past years, Piper analyst Christopher Larsen wrote. Furthermore the stock, which has a 7.5% dividend yield, has become less attractive because the tax on dividends is likely to increase, Larsen added. The analyst reduced his price target on the shares to $42 from $45. Meanwhile, the analyst downgraded Windstream to Underweight from Neutral as he believes that the company's business is deteriorating more rapidly than previously expected, making it difficult for the company to keep investors' confidence. Furthermore, Larsen is worried that Windstream will not be able to afford to sustain its dividend at current levels in 2013. He lowered his price target on the shares to $6.50 from $8. In mid-morning trading, CeturyLink fell 51c, or 1.32%, to $38.01, while Windstream lost 0.22% to $8.29.