Barclays upgrades American Tower and Crown Castle on valuation, growth catalysts

Investing.com -- Barclays upgraded American Tower and Crown Castle to "Overweight" from "Equal Weight," arguing that U.S. tower operators are trading at decade-low valuations despite several potential catalysts that could support a recovery in growth and investor sentiment.

The brokerage said tower stocks have lagged broader markets this year, with the sector down between 1% and 16% compared with a 17% gain in the RMZ REIT index. While acknowledging structural challenges including industry maturity, carrier consolidation and greater network efficiency, Barclays believes current valuations more than reflect those concerns.

As a group, tower companies are trading at roughly 15 times adjusted funds from operations per share, the lowest level in more than a decade, according to the brokerage. Barclays expects U.S. organic growth to stabilize at 4% to 5%, supported by contractual escalators and lower churn, with growth potentially reaccelerating after a weak second half of 2026 and early 2027.

Barclays cited several potential catalysts, including settlements related to claims against Dish/EchoStar, additional spectrum transactions, network densification requirements, share buybacks and the possibility of new wireless entrants driving tower demand. The firm also pointed to management commentary from major tower operators suggesting 2026 will mark the low point for organic growth.

The brokerage raised its rating on American Tower (AMT) to Overweight and increased its price target to $198 from $195, citing expectations for stronger domestic leasing activity, international growth and continued momentum at its CoreSite data center business.

Barclays also upgraded Crown Castle (CCI) to Overweight, although it lowered its price target to $84 from $92. The brokerage said concerns about satellite competition and slowing services revenue appear overdone, while the company's simplified tower-focused strategy following its fiber divestiture and lower leverage could support a rerating of the shares.

Barclays maintained its Overweight rating on SBA Communications (SBAC) but reduced its price target to $208 from $245, reflecting lower expectations for industry consolidation. The brokerage nonetheless said the stock's valuation remains attractive and expects growth to resume in 2028 as international churn moderates.

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