The Benchmark Company Reiterates Buy Rating on American Tower (AMT)

The Benchmark Company is out with a research report this morning, where it reiterates its Buy rating on American Tower AMT; it has a $50.00 price target on the stock. The Benchmark analysts cited two key developments for the company: an oft-delayed Mexican spectrum auction concluded and Harbinger Capital formed LightSquared to develop and operate a US wireless network. In regards to the Mexican auction, Telcel, dominates the wireless market there with roughly 70% of subscribers, Telefonica, with about 21%, and Iusacell and Nextel International having about 5% and 4%, respectively. AMT’s Mexican growth has lagged the US as spectrum-constrained carriers awaited this Auction, but American Tower is the only sizeable independent tower operator in Mexico now and therefore should “benefit from initial 3G overlays and subsequent capacity enhancements.” The Benchmark analysts added, “Organic growth has been about 5%. With this new spectrum, we believe growth will pick-up in 2011.” In regards to Harbinger Capital’s venture, the company has formed In the US, Harbinger formed LightSquared to build a nationwide wholesale wireless network. The Benchmark analysts said, “Based on a stated goal of 40,000 cell sites deployed by 2015, it could create about $115 million in industry revenue per year for the next five years.” As for valuation, the analysts remarked, “American Tower trades at 17x and 20x our 2010E adjusted FFO and FCF. This equates to about 1x growth. We believe American Tower is a relatively safe, attractively valued stock and maintain our Buy rating. Our price target is $50 per share.”