On Wednesday, BofA Securities adjusted its outlook for CommScope Holding (NASDAQ:COMM), reducing the price target to $1 from the previous $2, while maintaining an Underperform rating on the stock. The communication equipment company's fourth-quarter revenue fell short of expectations, coming in at $1.19 billion, which was below the anticipated $1.26 billion.
The firm expressed concerns about CommScope's growth prospects over the next year, anticipating a 37% year-over-year decline in EBITDA for 2024. The analysis highlighted uncertainties surrounding the company's strategy for addressing its June 2025 debt repayment and restructuring obligations totaling $1.275 billion.
The analyst also noted an increase in CommScope's net leverage, which rose to 8.0 times in the fourth quarter, up from 6.7 times in the previous quarter, attributing the rise to a decrease in EBITDA. Management at CommScope expects a difficult start to the year, with forecasts for both first-quarter revenues and adjusted EBITDA to decline significantly from the previous quarter.
In light of these challenges, BofA Securities reiterated its Underperform rating and adjusted its estimates for CommScope. The new price objective of $1 is based on an 8x multiple of the company's projected FY26 enterprise value to EBITDA, a reduction from the 8x multiple of the projected 2025 figures used previously.
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