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Charter Communications, Inc. (NASDAQ:CHTR) underperformed Street expectations in its fourth-quarter earnings. The sharp, bottom-line miss didn’t faze Raymond James, though.
The Rating
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Analyst Frank Louthan maintained a Strong Buy rating on Charter and raised his price target from $365 to $400.
The Thesis
Louthan expressed optimism around the “economics” of the company, as Charter exceeded estimates in residential customer counts, revenue and earnings before interest, tax, depreciation and amortization (EBITDA).
“Our thesis remains that Charter as a scale provider has the ability to gain incremental share of current passings and can continue to profitably grow EBITDA and FCF/ share with or without video subscriber growth,” he wrote in a note.
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Consistent with Louthan’s forecasts, Charter guided for an annual capex decline, which drove a stock pop following the fourth-quarter earnings print. The analyst anticipates waning capital intensity to drive growth in free cash flow.
“Investors have seen this management team reduce capital intensity and its real and sets a new baseline, in our view,” Louthan wrote. “As such, it should have a positive impact on FCF for street models.”
Raymond James increased its revenue, EBITDA and FCF estimates to account for capex declines and expected share repurchases.
Price Action
At time of publication, Charter shares traded around $339.38.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.