Ahead of the Bell: Citi cuts Level 3 to 'Sell'

Shares of Level 3 declined 7 cents, or 2.2 percent, to $3.05 in premarket trading Monday.

Michael Rollins cut his entire revenue growth rate estimate on the telecommunication services sector to 3 percent from 4 percent, saying a weaker economy is weighing on the companies, while several key growth areas have already matured.

The lower sector outlook means shares of Level 3, in particular, may now be overpriced, he said, downgrading the stock from "Hold." In addition, the company's recent near-term improvements in operating income before depreciation and amortization have been driven by unsustainable wholesale revenue growth, he said.

Rollins cut his price target on the Broomfield, Colo., company to $2.50 from $3, implying he expects shares to lose 20 percent of their value from Friday's close of $3.12.

He said shares could see a boost if the company raises funds or if it sees better enterprise sales.

A Level 3 representative could not immediately be reached for comment early Monday.

The stock has traded between $1.68 and $6.42 in the last 52 weeks.