UPDATE: Collins Stewart Finds SBA Communications Very Attractive; Raises PT

According to a research report published today, Collins Stewart finds SBA Communications SBAC to be a very attractive stock at the moment, even with a new twist. Collins Stewart commented in the report, “Although the revenue split model appears to be an obvious negative, we note that the details in the agreement with its anchor tenant likely enable SBA to benefit from future upside with little near-term impact. Our analysis indicates that at or below 2.0 tenants per tower, the company would realize higher tower cash flow margins under the revenue split model, than the traditional model. It is critical that the company used 2.0 tenants per tower as terminal occupancy when calculating its acquisition IRRs. As such, if occupancy grows above 2.0 in the future, SBAC enjoys “free” benefits even at lower cash flow margins on the incremental revenue, since it has not been built into the initial expectations at acquisition. We note these assets currently has 1.3 tenants per tower.” Collins Stewart maintains its Buy rating on SBA, and increases PT from $50 to $56. SBA Communications closed Friday at $46.84.