- Two firms downgraded Altice USA Inc (NYSE: ATUS), including a price target cut.
- Raymond James analyst Frank Louthan downgraded Altice USA to Market Perform from Outperform without a price target.
- Louthan downgraded Atlice USA following recent management commentary detailing broadband added pressure and the strategic shift toward "heavier" investment and away from buybacks, which he said were a vital part of the value proposition for shareholders.
- Management indicated during a recent presentation that they were not seeing the same traction with internet net additions that typically accompanied the start of the school year, Louthan noted.
- Louthan said the broadband and mobility weakness combined with a de-emphasis on buybacks could pressure the shares for the next several quarters.
- Credit Suisse analyst Douglas Mitchelson downgraded Altice USA to Neutral from Outperform with a price target of $24, down from $46, implying a 16.6% upside.
- Altice is now trading "well below its likely asset value," and management's pivot from focusing on margins and stock buybacks to a more aggressive fiber overbuild/edge out strategy could prove successful longer-term, Mitchelson noted.
- However, Mitchelson said he's been wrong on Altice's current broadband competitiveness and near-to-mid-term growth outlook.
- Mitchelson expects management's new investment strategy will "take at least several quarters, if not longer, to begin bearing fruit."
- Even at the risk of marking the bottom for Altice's stock, it is more appropriate to revisit Altice "when we develop greater confidence in the timing, execution and likely impact of the company's upcoming investment strategy."
- Price Action: ATUS shares traded lower by 1.55% at $20.26 in the premarket session on the last check Monday.
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