KeyBanc's Infra Preview: 'We Highlight CCI and DLR'

KeyBanc analyst Brandon Nispel highlights CCI and DLR in the 2Q26 Comm. Infra Preview note.

The analyst commented: "We see the 2Q26 Comm. Infra. setup as straight-forward: DLR/EQIX likely need to continue to beat/raise guide, while the bar is low for AMT, CCI, SBAC where in-line/maintain is likely good enough. The AI narrative (Hyperscale build out, Enterprise inference inflection) is intact, favoring Data Centers, though with Tower leasing near trough, consolidation churn is behind us, upper C-band auction ~one year away, and optionality in a potential new customer with SPCX, the Tower setup appears to be improving. CCI and DLR are names we highlight for 2Q.

Data Centers - We expect solid, but not blowout, bookings numbers. We see EQIX reporting quarterly annualized bookings of ~$402M (+16.4 y/y), where the 2H should be stronger than 1H given: 1) seasonality; and 2) the level of cabinet net adds in the development pipeline. For DLR, we see total bookings at DLR share of $138M (+2% y/ y), with 0-1MW >$100M (new record), and >1MW of $54M. We do expect DLR to have a record >1MW lease signing year, though that is 2H weighted. Data Centers stocks have almost fallen out of favor recently, which we attribute to: 1) potential concerns around capex trends; and 2) sentiment around data center builds with Data Center moratorium/ NIMBY taking hold. We think this generally sets up as a positive trading opportunity NT. Towers - We expect leasing to be in line; forward commentary likely reflects cautious optimism. We expect U.S. leasing to ~flat q/q in 2Q26, and for the remainder of 2026, and guidance to be reiterated. We think forward commentary on bookings is likely to be somewhat in line with prior quarters where there is cautious optimism that 2026 is the bottom. We think there are structural factors suggesting an investment cycle is imminent including: 1) upper C-band auction; 2) AI impact on upstream traffic; and 3) a broader need to solidify terrestrial network competitive positioning vs. Satellite. Further, while not factored into our estimates, we think there is likely growing optimism toward a potential selective Starlink terrestrial build. We maintain that Tower leasing is near a cyclical bottom as 2026 leasing represents a ~45% decline from all-time highs in 2023, and a ~25% decline from 2017-2019 pre-DISH levels. We think the valuation dispersion between the group appears too wide. We think the recent Data Center pullback creates a potential opportunity, though Tower valuations remain more attractive, in our view. With DLR/EQIX trading at ~18x/~21x our 2027 EV/ EBITDA and P/AFFO (cFFO), respectively, which compares to AMT, CCI, and SBAC trading at ~18x/~15x EV/EBITDA and P/AFFO, we think this dispersion could be too wide. We think both groups can potentially work: for Data Centers, estimates need to move higher, while for Towers, we think valuation eventually recovers as growth (organic leasing and AFFO/sh) improves. We are adjusting estimates ahead of earnings based on recent commentary and assumptions."

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