Among U.S. cable operators, Altice USA Inc ATUS is the most at risk from potential broadband pricing pressure, according to BofA Securities.
The Altice USA Analyst: Jessica Reif Ehrlich downgraded the rating for Altice USA from Neutral to Underperform, while keeping the price target unchanged at $38.
The Altice USA Thesis: Broadband pricing pressure could result from intensifying competition from fixed wireless broadband and fiber, as well as political and regulatory pressure, Reif Ehrlich said in the downgrade note.
Altice USA’s mobile business has stagnated, while its peers are generating accelerated growth, she added.
The stock trades at a premium to that of Charter Communications Inc CHTR and Comcast Corporation CMCSA, “despite the strong likelihood in our view that the latter two companies will extract more value from each household in the future due to faster wireless growth,” the analyst noted.
The company’s “original plan to grow through implementing its 'Altice Way' on acquired assets remains limited by a lack of available cable systems for sale,” Reif Ehrlich wrote. “Altice’s edge out strategy will take a number of years to generate growth,” she added.
ATUS Price Action: Shares of Altice USA are down 0.76% to $36.68 at the time of publication Tuesday.
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