Raymond James Upgrades SBA Communications: Valuation More Attractive Versus Historical Levels

Wireless communications infrastructure owner SBA Communications Corporation SBAC offers a more attractive risk despite a shift in sentiment away from "safer names" like tower stocks, according to Raymond James.

The SBA Communications Analyst: Ric Prentiss upgraded SBA communications' stock rating from Outperform to Strong Buy with an unchanged $309 price target.

The SBA Communications Thesis: SBA's stock has lost more than 20% over the past six months amid expectations for higher interest rates and investors flocking towards "re-opening" stocks, Prentiss wrote in the upgrade note.

However, SBA has two catalysts ahead that would translate to upside potential for the stock.

First, REIT-focused funds are likely to seek out exposure to infrastructure stocks like SBA. Second, upcoming analyst day presentations at major cell phone carriers could emphasize the bullish case for tower stocks.

Related Link: Benzinga's Top Ratings Upgrades, Downgrades For March 5, 2021

SBA stands out among its peers given:
1) Superior exposure to U.S. towers. 

2) Higher quality-adjusted funds from operations (AFFO) to funds available for distribution (FAD) conversion.

3) Expectations for superior dividend growth.

4) A reputation for buying back stock "opportunistically."

"All in all, we like all three tower stocks, but think the FAD valuation and AFFO/share and Dividend/share growth profiles are most attractive at SBAC, and we see significant upside," the analyst wrote.

SBAC Price Action: Shares of SBA Communications were trading higher by nearly 2% Friday afternoon at $240.11.

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