Updated Research Report on American Tower - Analyst Blog

On May 28, 2014, we issued an updated research report on American Tower Corp. AMT. Increased deployment of 3G/4G networks, aggressive buyouts of towers in emerging markets, significant margin improvement and higher dividend growth should continue to act as catalysts for the company, in our view.

AmericanTower delivered positive earnings surprises in two of the last four quarters, with an average beat of 4.23%.The company reported lackluster first-quarter 2014 results, wherein both the top and the bottom line missed the corresponding Zacks Consensus Estimate. 

Higher adoption of smartphones/tablets coupled with increased deployment of 3G/4G networks by carriers across the world will continue to drive demand for tower space. American Tower is rapidly expanding its business operations in various emerging markets. In addition to Brazil and Mexico, American Tower has taken a major initiative to expand its operations in India. Moreover, the company has started offering cost-effective outdoor Distributed Antenna Systems (DAS) to its customers.

On the  flipside, American Tower has a substantially leveraged its balance sheet. At the end of the second quarter of 2013, the company had nearly $8.79 billion of net debt (total debt-cash & cash equivalents) and the debt-to-capitalization ratio stood at 0.71. High debt levels lower the company's ability to generate sufficient cash to meet future debt obligations. This may also hinder the company's efforts to access the debt market to borrow and refinance at favorable rates.

Furthermore, high customer concentration coupled with substantial exposure to foreign exchange rate risks are likely to act as headwinds for AmericanTower, going forward.

Currently, AmericanTower has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Other stocks in the wireless tower industry include Aviv REIT, Inc. AVIV, The GEO Group, Inc. GEO and Terreno Realty Corp. TRNO. All three have a Zacks Rank #1 (Strong Buy).

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AMER TOWER CORP AMT: Free Stock Analysis Report
 
AVIV REIT INC AVIV: Free Stock Analysis Report
 
GEO GRP INC/THE GEO: Free Stock Analysis Report
 
TERRENO REALTY TRNO: Free Stock Analysis Report
 
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