Macquarie Says American Tower Now Worth $107/Share, Upgrades To Outperform

In a report published Wednesday, Macquarie Research analysts upgraded the rating on

to Outperform, while raising the price target from $102 to $107. The analysts consider the company's stock as "compelling" following its recent underperformance. "We believe that AMT's mgmt. will slow down the pace of global M&A over the next 12-18 months and focus on VZ tower lease-ups and a potential public safety opportunity in 2H16, despite a plethora of assets reportedly for sale in Europe, India, Africa and LatAm. In our view, tower stocks perform the best when there is no M&A and the companies can naturally deleverage and return excess cash to shareholders," Piper Jaffray noted in the report. American Tower's shares have underperformed the RMZ index by 16 percent and the CCI, SBAC and S&P500 by 6 percent each since 3Q14. Following this decline, the company's stock already reflects the headwinds related to the deal with

, currency pressure, slower US carrier spending and AMT's macro forecasting. A tower rally, with 30-40 percent return, as witnessed in past years, is unlikely. Having said that, the analysts believe that investors can receive a 15 percent total return on American Tower's shares, with limited downside risk. "In our view, AMT appears to be making a bet that VZ will win the entire FirstNet public safety network project. We believe that FirstNet, on the back of the $45bn AWS-3 auction, will be one of the key areas of focus at the upcoming PCIA towers conference in two weeks. We are increasingly of the view that VZ could win this project and that this could alleviate our concerns over the lack of a natural second tenant on the newly acquired VZ sites," the analysts added.