Why SBA Communications Is Towering Over Competition, Stock Gets Upgrade

SBA Communications Corporation SBAC is well-positioned to outperform as the 5G leasing cycle gains momentum, according to Morgan Stanley.

The SBA Communications Analyst: Simon Flannery upgraded the rating for SBA Communications from Equal-Weight to Overweight, while raising the price target from $321 to $337.

The SBA Communications Thesis: The stock is poised to outperform in the current environment, given the company’s “leading US tower exposure” and its attractive relative valuation, Flannery said in the upgrade note.

“Tower and carrier commentary in recent months has us increasingly positive on the domestic organic growth trajectory for the industry ... We expect each of the Big 3 carriers to become increasingly active in their 5G mid-band network deployments heading into 2H21,” he wrote.

The analyst expects the capital expenditure of the Big 3 carriers to grow to $60 billion by 2022, representing 23% growth from the 2020 levels.

Flannery named SBA Communications as the top pick, noting that it has “the highest exposure to domestic tower leasing and relative valuation upside” and a better risk-reward profile than its peers Crown Castle International Corp CCI and American Tower Corp AMT.

SBAC Price Action: Shares of SBA Communications were up 1.51% to $306.84 at the time of publication Wednesday.

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