Evercore Downgrades American Tower To Hold: FX Tailwinds Give Slight Upside

Evercore’s Jonathan Schildkraut named American Tower Corp AMT as the favorite in the tower group, given its “attractive relative multiple, the most balanced long-term drivers, an investment grade credit rating, and a small dividend.”

Schildkraut downgraded the rating on the company to Hold, while raising the price target from $105 to $110.

1Q Expectations

The company is scheduled to report its 1Q results on April 29. “Against a backdrop of steady (albeit muted) capital investment from carriers in the U.S., AMT should be able to deliver solid results and an improved outlook on FX benefits alone - while better than expected spending in Mexico, India, or Africa could also help,” Schildkraut stated.

The analyst expects FX tailwinds of $13.8 million for 1Q and $117.5 million for FY16 for American Tower’s site leasing revenues.

Stock Outlook

The analyst pointed out that the stock has appreciated 16.9 percent since American Tower reported its 4Q results, driven by a combination of improving relative valuation to growth profile as compared to its peers and the weakening US dollar.

However, given that U.S carrier spending is expected to remain muted till the end of the incentive auction, Schildkraut expressed a more bullish stance on other communications infrastructure names in the near term.