Market Overview

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

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

After wireless tower companies turned in muted year-over-year performance in 2018, Guggenheim looked at what's store for the sector in the year ahead and previewed fourth-quarter earnings.

The Analyst

Analyst Robert Gutman has the following ratings and price targets for the shares of tower companies:

American Tower Corp (NYSE: AMT): Neutral/$165.

CROWN CASTLE IN/SH SH (NYSE: CCI): Buy/$120.

SBA Communications Corporation (NASDAQ: SBAC): Buy/$185.

The Thesis

Carriers are increasing spending on 5G deployment, which should bode well for tower companies, Gutman said in a Tuesday note. The application and backlog activity cited by the tower companies as well as their full-year guidance suggests an acceleration in activity in Q4 thanks to strong carrier spending, the analyst said. 

Guggenheim forecast a mild acceleration in deployment of wireless equipment by carriers in 2019. All four major carriers — AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), T-Mobile Us Inc (NASDAQ: TMUS) and Sprint Corp (NYSE: S) — are likely to show incremental capex spending in 2019, Gutman said. 

Among other broader industry developments, the analyst said the Q4 prints will focus on the "timing and implications of deployment of new spectrum bands, updated views on the S/TMUS proposed merger and timing of the remainder of prior consolidation-driven churn." 

Guggenheim sees steady progress for Crown Castle amid expectation that new leasing activity will accelerate into the year's end, driven by demand by all four major carriers, with year-over-year net organic growth estimated at 5.7 percent.

For American Tower, Guggenheim expects 8-percent net organic growth in the U.S., while Indian churn is expected to negatively impact international growth. The blended net organic growth is forecast at 5.2 percent, Gutman said. 

"Net/net while we believe growth will improve in 2020, we anticipate a relatively slow year on a consolidated basis in 2019." 

The analyst projects net organic growth of 5.3 percent for SBA. Internationally, activity remained strong in Brazil, he said. International guidance for the full fiscal 2018 is conservative vs. the pace of activity, given the increasing spending by Brazilian carriers throughout the year, Gutman said. 

Despite their muted performance throughout 2018, tower stocks outperformed the broader market in Q4, helped by the relative stability of the business models and defensive characteristics of the group, the analyst said. 

The stock multiples are in the middle of the long-term historical average, according to Guggenheim. 

Related Links:

How Correlated Are Tower Stocks And Telecoms?

24 Stocks Moving In Tuesday's Pre-Market Session

Latest Ratings for AMT

DateFirmActionFromTo
Jul 2020BarclaysInitiates Coverage OnOverweight
Jul 2020KeyBancDowngradesOverweightSector Weight
Jul 2020Wells FargoMaintainsOverweight

View More Analyst Ratings for AMT
View the Latest Analyst Ratings

 

Related Articles (SBAC + AMT)

View Comments and Join the Discussion!

Posted-In: Guggenheim Robert GutmanAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
WPMScotiaBankMaintains55.0
NPIScotiaBankMaintains39.0
MRUScotiaBankMaintains66.0
LUGScotiaBankUpgrades14.0
JWELScotiaBankMaintains37.0
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.
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 vipaccounts@benzinga.com