Cell Tower Stocks Remain "Hot", "Hot" and "Not So Hot" (SBAC) (CCI) (AMT)

October 17, 2012 3:28 PM EDT Send to a Friend
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Price: $98.87 -0.01%

Rating Summary:
    16 Buy, 4 Hold, 0 Sell

Rating Trend: Down Down

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    Up: 15 | Down: 36 | New: 10
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With the explosion in mobile data demand, cell tower stocks have been on fire for some time. However, today one analyst said its time to pull the plug on one of them.

Barclays downgraded American Tower (NYSE: AMT) from Overweight to Equalweight, although its price target was raised from $75 to $79. The firm said the benefit from RIET conversion is "largely done." They don't see much incremental benefit to come and don't expect to see any further REIT index inclusion.

While American Tower was cut, Barclays is still hot on the sector. They are reiterating their Overweight ratings on SBA Communications Corp. (NASDAQ: SBAC) and Crown Castle International Corp. (NYSE: CCI), with SBA Communications being the top pick.

The firm said the recently announced M&A in the US wireless market is likely to increase the long-term competition in the market and lower the risk of consolidation among the industry's larger players.

"We therefore prefer SBAC and CCI to AMT, as they allow investors to get exposure to the US market and tower industry growth trends at lower valuations (19x/18x 2013E AFFO) than that commanded by AMT, which at 21x 2013E AFFO, is trading in line with the overall REIT space."

The firm's price target on SBAC was raised from $59 to $77 and on CCI from $66 to $74.

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