Nov. 3, 2014, 8:48 AM
- Goldman and Macquarie have both downgraded American Tower (NYSE:AMT) to Neutral, and Nomura has issued a similar downgrade for Crown Castle (NYSE:CCI). Meanwhile, Goldman has upgraded CCI to Buy, and Raymond James has downgraded the company to Outperform from Strong Buy.
- AMT rallied on Thursday thanks to a strong Q3 AFFO figure and a full-year guidance hike. CCI sold off on Friday due to the company's soft 2015 outlook.
- Macquarie's Kevin Smithen says his firm has spent the last few days conducting checks to "try and reconcile" AMT's bullish commentary with CCI's cautious outlook. The checks "suggest a 100-150bps slowdown in industry US site leasing revenue growth in ‘16 as AT&T, Sprint and T-Mo reduce aggregate wireless capex and decommission Leap, Clearwire and Metro sites."
- He sees AMT's U.S. organic growth falling to 7.5% in 2015 and 6.4% in 2016 from 9.5% in 2014, and predicts the slowdown will yield multiple compression. "While we regard AMT’s mgmt. team and business model very highly, we are moving to the sideline on the shares until we feel ... expectations reflect slowing growth in ’16."
- Goldman's Brett Feldman says his "fundamental outlook for AMT" hasn't changed. However, he thinks "investors looking for exposure to the tower sector can generate a more attractive total return in CCI," following the company's huge dividend hike.
- If they pan out, Macquarie's checks also have implications for SBA (NASDAQ:SBAC). SBA's shares fell 1.8% on Friday thanks to Crown Castle.
Oct. 31, 2014, 6:17 PM
- Morgan Stanley's Simon Flannery: "Crown Castle (CCI -6.2%) now offers a ~4% dividend yield, based on [Thursday's] closing price, compared to the REITs, which yield between 3.3% and 3.9%. We continue to see upside, as the stock attracts income oriented investors."
- Though it just more than doubled its payout following pressure from activist Corvex Management, Crown Castle still expects to grow its dividend at a rate on par with its AFFO growth; the tower owner is aiming for 6%-7% growth on an organic basis.
- Shares sold off due to disappointment with CCI's 2015 outlook: The company expects AFFO/share of $4.31-$4.37, below a $4.75 consensus. Site rental revenue is expected to rise to $3.047B-$3.067B from a 2014 level of $3.001B-$3.006B.
Oct. 30, 2014, 6:42 PM| Comment!
Oct. 30, 2014, 5:34 PM
- Crown Castle's (NYSE:CCI) new quarterly dividend, provided after activist Corvex Management called for greater capital returns, is 134% above a prior $0.35/share, and good for a 4% yield. The next dividend is payable on Dec. 31 to shareholders on record as of Dec. 19.
- The tower owner expects Q4 AFFO/share of $1.04-$1.05 (close to Q3's $1.04). Site rental revenue is expected to rise to $755M-$760M from Q3's $752M.
- CCI -1.6% AH. Q3 results, PR.
Oct. 30, 2014, 4:06 PM
Oct. 30, 2014, 1:39 PM
- Though it missed Q3 EPS estimates (while beating on revenue), American Tower (NYSE:AMT) is hiking its full-year AFFO guidance to $1.8B-$1.82B from $1.755B-$1.795B.
- Also, AMT now respectively forecasts U.S. and international organic core revenue growth of 9.5% and 16%; prior guidance was for 9%+ and "nearly 15%" growth.
- Rental/management revenue guidance has been narrowed to $3.975B-$4.005B from $3.945B-$4.015B, and net income guidance lowered to $805M-$825M from $830M-$850M.
- Q3 AFFO rose 25.2% Y/Y to $460M ($1.15/share, well above EPS of $0.50).
- U.S. rental/management revenue +25.2% to $664M (+9.1% organic); international revenue +30.3% to $348M (+17.7% organic). Network development services revenue more than doubled to $27.1M.
- Rental/management op. margin slipped to 67% from 69% a year ago. AMT ended Q3 with $13.6B in net debt, and a 5.1x net leverage ratio.
- SBA (SBAC +1.4%) and Crown Castle (CCI +0.8%) are up moderately.
- Q3 results, PR
Oct. 29, 2014, 5:35 PM
- ADNC, ADUS, AEGR, AFFX, AHS, AHT, AIV, ALJ, ATEN, ATRC, AXTI, BCOV, BEAT, BYD, BYI, CCI, CHE, CODE, COLM, CPSI, CPT, CSLT, CTRL, CUBE, DCT, DGI, DGII, EGN, EGO, EHTH, ELGX, ELLI, ELX, EMN, EPAY, ESIO, ESS, EXPE, FLDM, FLR, FLT, FRT, GB, GDOT, GMED, GNMK, GPRO, GRPN, HIL, HME, IMMR, IMPV, INT, ISBC, KEG, LNKD, LRE, LYV, MCHP, MELI, MHK, MOH, MTZ, MXL, MYL, NATI, NEM, NR, NSR, NUVA, OIS, OMCL, ONNN, OPLK, OUTR, PKI, PSA, PXLW, QNST, RAIL, RSG, SAM, SBUX, SEM, SGEN, SGMS, SIMG, SPF, SREV, STAA, STAG, SYNC, TCO, TEP, THRX, TNAV, TPX, TRMB, TSO, TSRA, TSYS, TUES, VCRA, WU, YRCW, ZEN
Oct. 14, 2014, 9:23 AM
- Activist investor Corvex Management has disclosed a $1B (nearly 4%) stake in Crown Castle (NYSE:CCI), and is calling on the tower owner to either start paying over $4/share in quarterly dividends next year (Option #1), or over $1.60/share in dividends combined with ongoing buybacks (Option #2).
- The first option would require a steep 80%+ payout ratio, but maintain CCI's net debt/EBITDA ratio around 4.5x (potentially ~6x with M&A). The second would involve only a 30% payout ratio, but boost net debt/EBITDA to ~7x (~7.5x with M&A).
- Corvex argues "changing Crown Castle's capital allocation strategy would enable the company to attract a new class of yield-oriented investors," and that the company's plan to delay a full payout structure until the expiration of net operating losses in 2018-2020 is inadequate.
- As for speculation Crown Castle could bid for Verizon's tower portfolio, Corvex thinks CCI should change its capital allocation plan before making any offer. "We do not believe that the company should complete a Verizon transaction by increasing leverage and then de-levering again with no material change to its payout ratio."
- CCI's dividend yield is currently at 1.7%. The company reiterates it will discuss its capital allocation plans during its Oct. 20 Q3 CC.
Sep. 23, 2014, 6:13 PM
- Verizon (NYSE:VZ) has hired boutique i-bank TAP Advisors to find a buyer and work out a lease-back agreement for its 12K wireless towers by year's end, Bloomberg reports. It adds a deal could yield $6B, given how much AT&T received per tower in last year's $4.83B sale/leasing deal with Crown Castle (NYSE:CCI).
- Crown Castle, American Tower (NYSE:AMT), and SBA (NASDAQ:SBAC) have all been buying towers at a heady pace. However, the rising debt loads produced by the purchases could make one or more of the companies respond cautiously to Verizon's move.
- Verizon, for its part, is looking to de-leverage some after raising over $60B in debt to help pay for the Vodafone deal. The carrier had $104.2B in net debt at the end of Q2.
Sep. 2, 2014, 4:21 PM
- The IRS has ruled "the real property portion of Crown Castle's indoor and outdoor small cell networks and the related rents qualify as real property and rents from real property, respectively," under the rules governing REITs.
- CCI already began operating as a REIT at the beginning of the year. With the IRS letter in tow, the company plans to "take appropriate action to include the qualifying portion of its small cell systems as part of the REIT effective January 1, 2015." Certain "non-qualified assets" will remain held in taxable REIT subsidiaries.
- Shares +1.2% AH.
Aug. 21, 2014, 11:43 AM
- Hedge funds are having a difficult time of it again this year, up 1% vs. a 7.5% gain for the S&P 500, according to Goldman Sachs, which crunched the numbers on 775 funds with $1.9T in AUM.
- Nevertheless, Goldman's list of 50 stocks which "matter most" to hedge funds has outperformed the S&P 500 on a quarterly basis 66% of the time since 2001. The stocks this quarter (posted in order of the number of funds in which a name is a top-10 holding):
- ACT, AAPL, FB, AGN, AAL, GM, TWC, AIG, MSFT, HTZ, CHTR, MU, WMB, LNG, C, DAL, HCA, APC, CBS, ALLY, GOOGL, APD, NRF, BAC, EBAY, LBTYK, PCLN, VRX, BIDU, DTV, DISH, DG, EQIX, MA, WAG, ARCP, GILD, LINTA, MON, FOXA, VC, AMZN, BRK.A, BRK.B, SUNE, CMCSA, JPM, MIC, CCI, HES, LAMR.
- A special call-out to Northstar Realty (NYSE:NRF), Visteon (NYSE:VC), SunEdison (NYSE:SUNE), Macquarie Infrastructure (NYSE:MIC), and Lamar Advertising (NASDAQ:LAMR) for making the list of hedge fund hotels despite their relatively tiny market caps.
Aug. 8, 2014, 5:53 PM| Comment!
Jul. 28, 2014, 4:02 PM
- 6 firms have hiked their SBA (SBAC +3.3%) targets following the tower owner's Thursday Q2 beat. 3 of them - Barclays, Pac Crest, and JPMorgan - have lifted their PTs to $125.
- In addition to beating estimates, SBA raised its full-year AFFO guidance to $642M-$669M from a prior $616M-$652M. Revenue guidance has been hiked to $1.5B-$1.52B from $1.447B-$1.487B, and tower cash flow guidance to $1.021B-$1.031B from $989M-$1.009B. The outlook assumes the Oi tower acquisition will close on Dec. 1.
- Peer Crown Castle (CCI +2.4%) has also rallied. The company missed AFFO estimates last Wednesday (while beating on revenue), but also raised its full-year AFFO/share guidance to $4.13-$4.18 from $4.04-$4.08. Site rental revenue guidance was slightly raised to $2.99B-$3B from $2.983B-$2.993B.
Jul. 23, 2014, 4:06 PM
Jul. 22, 2014, 5:35 PM
- AF, AHL, AIZ, ALGT, ALSN, ANGI, ANGO, AVB, AWH, BDN, CA, CAKE, CCI, CHE, CLB, CLGX, CLW, CMRE, CRUS, CSGP, CTXS, EFX, EGHT, ETFC, ETH, FB, FFIV, FLS, FR, FTNT, GGG, GILD, HBI, HWAY, IBKC, ILMN, INFN, KALU, LHO, MAC, MKSI, MSA, NSR, NVEC, NXPI, OHI, OII, ORLY, PLCM, QCOM, QTM, RE, RJF, SFG, SGMO, SKX, SLG, SLM, SUSQ, T, TAL, TCBI, TER, TEX, TILE, TMK, TQNT, TRIP, TSCO, TYL, UMPQ, USTR, VAR, WFT
Jun. 13, 2014, 7:03 PM
- "The tower industry has several favorable characteristics ... such as recurring revenue streams with long-term contracts, high operating leverage and a benign competitive environment," writes Credit Suisse's Joseph Mastrogiovanni. 4G upgrades, data traffic growth, and pending spectrum auctions are all seen as catalysts.
- At the same time, Mastrogiovanni sees U.S. M&A activity - particularly a potential Sprint/T-Mobile deal - as a risk.
- American Tower (AMT), just started at Outperform, is his top pick in the space. He likes the company's international exposure (1/3 of revenue), and is the most insulated from M&A.
- Crown Castle (CCI) and SBA (SBAC) have been started at Neutral. Mastrogiovanni likes CCI's long-term potential, but also notes it has "the highest exposure to U.S. consolidation risk." He sees SBA benefiting from a lack of master lease agreements with AT&T/Verizon, but thinks it's also exposed to industry M&A.
- Worth noting: M&A only becomes a major issue if regulators approve a Sprint/T-Mobile deal. All signs suggest they still have their concerns.
- Crown Castle CEO Ben Moreland has argued a pending auction for the high-frequency AWS band will lead to "thousands" of new cell sites. A larger auction involving low-frequency spectrum is set for mid-2015.
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