Charter Communications (CHTR) PT Raised to $435 at Pivotal Research
Pivotal Research analyst Jeffrey Wlodarczak raised the price target on Charter Communications (NASDAQ: CHTR) to $435.00 (from $400.00) while maintaining a Buy rating.
The analyst comments "Charter reported better than expected 2Q results and implied 2H guidance highlighted by lower than forecast data losses, better than expected 2Q revenue (+0.2%) and EBITDA (~+3%) growth, higher than forecast 2Q free cash flow (partly working capital) and improving cost trends in 2H leading to increased 2H EBITDA expectations. Recall our view that investors were overreacting to potential downside from the end of ACP and it was unlikely that Charter was going to report negative EBITDA growth. Post results we overall raised our EBITDA/free cash flow expectations for ’24 and beyond which led to a $35 increase in our YE’24 target price to $435. Charter had (wrongly) in our view become a consensus short as investors bet on supposed data squeeze at the high per capita income consumer level (expanding FTTH competition) end and at the low end (FWA competition). This thesis ignores the fact that FTTH roll-out is a time consuming process, even with FTTH competition, CHTR has a better/cheaper converged offering and operates in a duopoly, consumer bandwidth demand continues to skyrocket which plays into CHTR’s best in class fixed data offering (allowing them to take share back from FWA) and most importantly Charter traded at well under replacement value (at 6.4X EBITDA). We also highlight once CHTR is finished with footprint expansion free cash flow should be meaningfully higher. At our new $435 target price CHTR would trade at 7.3X to ’24 EBITDA and 12.7x EPS vs. 6.8X and 10.7X currently. Reiterate BUY."