Cellnex Telecom Closing Valuation Gap With Peers Provides Upside Potential

Summary

  • Cellnex is undervalued vs. US peers, with a new shareholder-friendly policy including aggressive buybacks and a minimum €500M annual dividend starting next year.
  • Strong recurring levered free cash flow supports the investment thesis, with guidance for €1.9-1.95B RLFCF in 2024 and €2-2.2B by 2027.
  • Buybacks will boost RLFCF per share and dividend per share, with the stock trading at just 10.5x the 2027 RLFCF, well below US tower companies’ multiples.
  • Despite interest rate risks, Cellnex’s long-term contracts and improving cash flows support my bullish outlook, targeting 18-20% annualized returns through 2027.
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Introduction

Cellnex Telecom (OTCPK:CLNXF) (OTCPK:CLLNY) is the largest owner and manager of cell phone towers in Europe, with in excess of 100,000 towers in its asset base. As the company doesn’t have the same brand/name recognition as its peers American

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This article was written by

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The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of CLLNY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have also written put options on Cellnex, and will continue to do so to further increase my position.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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