Cellphone towers could do now wrong for investors when the use cellphone and wireless communications was growing year after year. Now it seems like anyone and everyone, regardless of income brackets, has a cellphone and multiple connected devices. This means that the cellphone tower operators are facing ultimate business growth opportunities capped out. Or does it?
It turns out that the cellphone tower industry’s peak in the last five years has created much investor turnover. And Oggonomics has warned many times what happens in the transition period when growth stocks have to mature into value stocks.
Slower growth means less chasing by investors. But now cellphone towers are significant yield-monsters for income investors. And they may even be in the value stock category, at least compared to years ago. And there is the entire argument that the use of AI on connected devices and cellphones may create a huge ramp-up opportunity for the cell tower operators when contracts come up for bid in the years ahead.
Barclays has just issued a positive report for the top three cell tower carriers with higher price targets. The analyst report is calling for increased guidance from the likes of American Tower Corporation (NYSE: AMT) and SBA Communications Corporation (NASDAQ: SBAC) being helped by currency and transaction timing.
American Tower was reiterated as Overweight and its price target was raised to $246 from $223 (versus $230 now) at Barclays. This is a strategic call in nature because it is ahead of the earnings report rather than adjusting figures after a report. AMT has a dividend yield of nearly 3% and its consensus analyst price target is closer to $250. American Tower’s stock is up 25% YTD and up over 9% from a year ago.
SBA Communications was also reiterated as Overweight and the price target was raised to $257 from $247 (versus $235 now) in this Barclays note. Again, it is a pre-earnings call that makes this a strategic call rather than a reactionary call. SBA still has a dividend yield of under 2% and its consensus analyst price target is $256. Its stock is up 20% YTD and up 13% from a year ago.
Crown Castle Inc. (NYSE: CCI) was given a smaller price target hike than AMT/SBAC — to $117 from $113 — while Barclays maintained its Overweight rating. Crown Castle’s stock has been more severely punished versus AMT/SBAC’s peak in the last 5 years, but as a result its dividend yield is roughly 4%. Its shares are also very close to the $114 consensus analyst price target. Crown Castle’s stock is up 20% YTD but up just 4% from a year ago.
Investors should know that the earnings reports from cellphone tower operators are almost imminent. These price target hikes are ahead of those reports, and the report does favor both AMT and SBAC over CCI for upside revisions.
As a constant reminder, Oggonomics always likes to remind investors that no single analyst report should ever be the sole basis to buy or sell a stock. Investors also need to do their own research because analysts sometimes get their thesis wrong just like the rest of us. And any decision to buy or sell should be made after consulting with a financial advisor or professional.
