UPDATE: ISI Group Upgrades American Tower Corp. to Buy, Reiterates $79 PT on Healthy Internal Growth, FCF Generation

In a report published Tuesday, ISI Group analyst Steve Sakwa upgraded the rating on

from Neutral to Buy, and reiterated the $79.00 price target. In the report, ISI Group noted, “We are upgrading American Tower (AMT) to Buy from Neutral as the stock has seen meaningful share price underperformance over the past three months (down 16% over that period which equates to 20% relative underperformance vs. the S&P and a 750bp underperformance vs. REITs) despite a Q2 earnings report and outlook for tower demand which was better than expected. For example, AMT's outlook for core growth of 8% for its domestic portfolio and 12% in its international portfolio is modestly above our assumptions at the start the year which assumed internal growth of 7.5% and 10.4%, respectively, so the revised outlook is better than expected. Going forward, we underwrite domestic SS NOI growth of ~7% per annum over the next 12 and 36 months, on average, while we underwrite NOI growth in the international portfolio of 10.4% over the next twelve months and ~11%, on average, over the next three years.” American Tower Corp. closed on Monday at $69.66.