On Thursday, BofA Securities showed confidence in Crown Castle's (NYSE:CCI) shares steady performance by increasing the company's price target from $105.00 to $110.00, while keeping a Neutral stance on the stock.
The adjustment follows Crown Castle's second quarter 2024 earnings, which aligned with revenue and adjusted EBITDA expectations but fell short on adjusted funds from operations per share.
The telecom infrastructure provider's recent earnings call focused on several key areas. These included the ongoing strategic review of its fiber business, insights from the fiber solutions operational review, and an analysis of the current trends in domestic tower and small cell operations.
Notably, Crown Castle has decided to shift from its long-standing practice of providing annual guidance alongside third-quarter earnings, opting instead to release this information with fourth-quarter results.
The BofA analyst remains optimistic about Crown Castle's domestic tower segment, suggesting that a potential easing of interest rates could favorably impact the company's growth in adjusted funds from operations per share. Despite this positive outlook, the analyst indicated that the unresolved status of the fiber business review continues to pose uncertainty for the company's stock.
In setting the new price objective, BofA Securities employed a weighted average sum-of-the-parts (SOTP) 2025 adjusted funds from operations multiple of approximately 16 times, an increase from the previous multiple of around 15 times. This calculation underpins the revised target of $110.00.
Crown Castle has not made any changes to its 2024 guidance ranges, which were previously updated following the fiber solutions operational review in June. The guidance remains as initially set, despite the earnings miss in the adjusted funds from operations per share metric for the second quarter.
In other recent news, Crown Castle has seen significant developments. The company's second quarter of 2024 performance was mixed, but the guidance for the year remained steady, leading TD (TSX:TD) Cowen to raise the price target to $127. Crown Castle's Fiber business is under review for a potential sale of a minority stake, which is being closely watched by investors.
Additionally, Crown Castle has initiated a strategic shift, aiming to reduce operating expenses by $100 million and cut growth capital expenditures by $300 million. However, Wells Fargo (NYSE:WFC) maintains its Equal Weight rating on Crown Castle, expressing concerns about the company's ability to sustain growth rates with decreased spending. BofA Securities and RBC (TSX:RY) Capital have also maintained their Neutral and Sector Perform ratings respectively, while adjusting their price targets.
In the first half of 2024, Crown Castle faced campaigns from activist investors, with Elliott Investment Management securing a position on the company's board. Despite this activity, the success rate of these campaigns in boardroom battles has seen a decline.
Lastly, Crown Castle has received endorsements from Egan-Jones Ratings Company and Institutional Shareholder Services, advising votes for all 12 of Crown Castle's director nominees, amidst a challenge from Boots Capital Management for a significant board overhaul. These are the recent developments surrounding Crown Castle.
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