Morgan Stanley analyst Benjamin Swinburne downgraded Charter as he sees the U.S. broadband industry facing slowing net additions
Shares of Altice USA (ATUS) are under pressure on Thursday after JPMorgan analyst Philip Cusick downgraded the stock to Neutral as he sees comments at recent industry conferences pointing to “weak” subscriber momentum for Altice. Comcast (CMCSA) has also been in the spotlight this week after the company updated its full year broadband addition guidance, saying it now expects a total of 1.3M net broadband adds this year, which is short of analyst expectations of 1.4M subscribers.
SUBSCRIBER MOMENTUM TRENDS: JPMorgan analyst Philip Cusick downgraded Altice USA to Neutral from Overweight with a price target of $20, down from $25. Following comments at recent industry conferences, the analyst sees “weak” subscriber momentum for Altice. While management is rightly stepping-up network and service investments, the guide down in broadband subscriber growth “underscores what may be a multi-quarter lag” before investments yield improving subscriber growth, Cusick told investors in a research note. The analyst sees no reason to defend shares at this level, and prefers other cable names including Charter (CHTR) and Comcast after the sector selloff.
Meanwhile, Benchmark analyst Matthew Harrigan lowered the firm’s price target on Altice USA to $30 from $48 but kept a Buy rating on the shares. The analyst is “admittedly belatedly” lowering his 2022 price target in the wake of Tuesday’s cautionary 2022 comments from CEO Dexter Goei at an investor conference, said Harrigan, who pointed to the “backbreaker” for the reduction being Tuesday’s intimation for flattish 2022 broadband pricing. He is lowering his 2022 broadband additions estimate to 54,000 from 78,000 but more significantly cutting his top line and EBITDA estimates.
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