Collins Stewart Maintains a 'Buy' on Crown Castle (CCI); Raises PT
CCI Hot Sheet
Rating Summary:9 Buy, 2 Hold, 1 Sell
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Collins Stewart maintains a 'Buy' on Crown Castle (NYSE: CCI), PT increased $1 to $56.
Collins analyst says, "Although the merger of two wireless carriers with a common technology (GSM based) represents an unambiguous negative for the tower stocks in that investors will expect at least some of the 40k + cell sites to be rationalized, it is important to note that because T-Mobile USA’s 3G (NYSE: DT) spectrum runs on the AWS frequency while AT&T’s (NYSE: T) runs on a combination of 1900 and 850 Mhz. Therefore, even if contracts allowed, we would expect the same cell site rationalization that we witnessed during the Cingular (BellSouth – SBC Communications) merger with AT&T Wireless – slow and simply not noticeable in the financials of the tower stocks. With AT&T’s commitment to a rural broadband build out, we expect SBA Communications (Nasdaq: SBAC) should have the least adverse (and possible positive) impact."
"Our price target of $56.0 per share is based on a combination of multiple-based valuation and DCF analysis. On an EBITDA multiple basis, we believe it is prudent to assume a peer group average of 17.0x, even though CCI has arguably a tower portfolio with more favorable locations and an improving capital structure. From a REIT valuation perspective, we apply a P/FFO multiple of 18.0 to its REIT equivalent FFO in 2015."
For more ratings news on Crown Castle click here and for the rating history of Crown Castle click here.
Shares of Crown Castle closed at $39.16 yesterday, with a 52 week range of $34.25-$46.27.
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Collins analyst says, "Although the merger of two wireless carriers with a common technology (GSM based) represents an unambiguous negative for the tower stocks in that investors will expect at least some of the 40k + cell sites to be rationalized, it is important to note that because T-Mobile USA’s 3G (NYSE: DT) spectrum runs on the AWS frequency while AT&T’s (NYSE: T) runs on a combination of 1900 and 850 Mhz. Therefore, even if contracts allowed, we would expect the same cell site rationalization that we witnessed during the Cingular (BellSouth – SBC Communications) merger with AT&T Wireless – slow and simply not noticeable in the financials of the tower stocks. With AT&T’s commitment to a rural broadband build out, we expect SBA Communications (Nasdaq: SBAC) should have the least adverse (and possible positive) impact."
"Our price target of $56.0 per share is based on a combination of multiple-based valuation and DCF analysis. On an EBITDA multiple basis, we believe it is prudent to assume a peer group average of 17.0x, even though CCI has arguably a tower portfolio with more favorable locations and an improving capital structure. From a REIT valuation perspective, we apply a P/FFO multiple of 18.0 to its REIT equivalent FFO in 2015."
For more ratings news on Crown Castle click here and for the rating history of Crown Castle click here.
Shares of Crown Castle closed at $39.16 yesterday, with a 52 week range of $34.25-$46.27.
Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!
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