Market Overview

Cable One's Strategic Positioning Is Underappreciated, KeyBanc Says In Upgrade

Cable One's Strategic Positioning Is Underappreciated, KeyBanc Says In Upgrade

A strategic focus on broadband and commercial services has resulted in Cable One Inc (NYSE: CABO) posting adjusted EBITDA margins of around 47 percent and unlevered FCF margins of 27 percent, versus peer averages of around 39 percent and 23 percent, respectively, according to KeyBanc Capital Markets. 

The company’s adjusted EBITDA and unlevered FCF margins could trend toward 52 percent and 35 percent, respectively, over the next three years, the sell-side firm said in a Monday note. 

The Analyst

Analyst Brandon Nispel upgraded Cable One from Sector Weight to Overweight and set a $1,025 price target.

The Thesis

Cable One's Clearwave Communications acquisition is expected to generate $34.9 million in revenue and $23.7 million in adjusted EBITDA in 2019, Nispel said in a note. 

Although there is uncertainty surrounding Cable One's rebrand to Sparklight, Cable One has upside to the consensus estimates for 2019, the analyst said. 

Cable One has 800,000 customer relationships and is the seventh-largest U.S. cable provider. Given its smaller size, the company may become an acquisition target in a space where cable systems have received 11-12 times EBITDA multiples, Nispel said. This will offer downside valuation support, he said. 

The company has managed to accelerate growth by leveraging its existing platform to acquire rural cable operators, the analyst said. If the company continues this strategy, it should have a superior growth profile relative to peers, he said. 

5G is unlikely to be a threat for Cable One in the next several years given the company’s rural positioning, according to KeyBanc. 

Price Action

Cable One shares were trading more than 1-percent higher at $841.55 at the time of publication Tuesday. 

Related Links:

Guggenheim: Wireless Carrier Spending On 5G A Bullish Signal For Tower Companies

Raymond James Flips The Channel On Cable One, Downgrades To Neutral

Latest Ratings for CABO

Sep 2019MaintainsOverweight
Aug 2019MaintainsBuy
Jun 2019Initiates Coverage OnEqual-Weight

View More Analyst Ratings for CABO
View the Latest Analyst Ratings

Posted-In: Brandon Nispel cable KeyBanc Capital MarketsAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (CABO)

View Comments and Join the Discussion!

Latest Ratings

INFYBank of AmericaUpgrades
BRMKPrescience PointInitiates Coverage On15.3
DENNSunTrust Robinson HumphreyInitiates Coverage On21.0
DINSunTrust Robinson HumphreyInitiates Coverage On111.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

China's GDP Growth In 2018 Was Lowest Since 1990

On The Right Track: The Railroad Industry Keeps Chugging Along