UPDATE: KeyBanc Upgrades SBA Communications (SBAC) to Overweight As Valuation Becomes Compelling
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(Updated - March 26, 2021 9:23 AM EDT)
KeyBanc analyst Brandon Nispel upgraded SBA Communications (NASDAQ: SBAC) from Sector Weight to Overweight with a price target of $313.00. The analyst sees a positive risk/reward for all towers given they are trading at 23.5x 2022 AFFO/share vs. the REIT average of ~23x. We see differentiating factors for each tower operator (i.e., international exposure, fiber/small cells exposure, U.S. tower growth trajectories) that all hold certain attractive characteristics; however, we believe rowers are likely to make up for under-performance relative to the REIT average.
We recommend Overweight positions in SBAC. SBAC is a mainly U.S.-focused tower business that should trade at a premium relative to peers over the long term. We believe SBAC has significant upside potential in an accelerating leasing environment and, in particular, believe SBAC could benefit from increased Verizon exposure. We believe SBAC is likely to achieve mid-single-digit organic growth over the long term and see AFFO/share growth approaching double digits, which may lead its peer group. Additionally, SBAC remains focused on retaining its leverage targets though M&A and share repurchases, both of which should provide value for investors."
Shares of SBA Communications closed at $272.46 yesterday.
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