Crown Castle Results Welcomed on Wall Street

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Despite reporting mixed financial results for the fourth quarter on Wednesday, most Wall Street analysts were cautiously upbeat about Crown Castle International’s performance. As Zacks noted yesterday, Crown’s “top line beats the Zacks Consensus Estimate but the bottom line lagged the same.”

The Houston-based company reported earnings per share of $1.11, “a penny short of the Zacks Consensus Estimate. However, GAAP net income fell roughly 5.1% year over year to $130.1 million. Net revenue in the quarter increased 2.2% year over year to $945.8 million, outpacing the Zacks Consensus Estimate of $932 million.”

After combing through the results, Cowen and Company analyst Colby Synesael told investors Crown Castle has “solid 4Q15 results that exceeded the mid-point of guidance and raised 2016 guidance albeit largely as a result of delayed churn.” And while the company also announced CEO Ben Moreland will be stepping down and that CFO Jay Brown will assume the role, the analyst observed that the management move “creates noise but really is a non-issue” at least for initial trading. “We expect the stock to trade up slightly relative to the overall market.” And CCI shares on the New York Stock Exchange did tick up nearly 2 percent or $1.62 yesterday to close at $84.81. As far as future growth goes, Synesael noted, Crown Castle, which acquired Sunesys only last summer, “maintained expectations for Sunesys which suggests very little growth and we believe will prove a source of additional upside during the year.” The analyst has an “outperform” rating on the issue and his 12-month target price $94 a share. Barclay’s Amir Rozwadowski last night gave the stock an Equal Weight/Neutral with a price target of $91, and upside of 9.4 percent.

Over at New/Street Research, analyst Spencer Kurn’s report maintained a “Neutral” rating on CCI but gave the company a positive review for its 4Q performance. “We expected a modest beat and raise this quarter and CCI delivered it cleanly. The most interesting component of the results was churn – some of the leases from PCS, LEAP, and Clearwire that CCI had earmarked to be terminated were actually extended.” The analyst said he found the company’s improved guidance “somewhat comforting after a week where some had feared Sprint may be shutting down a significant number of sites. The towers are trading near historic lows on AFFO (adjusted funds from operations) on the premise that organic growth is slowing; however, we think growth is poised to accelerate late in the year with the start of AWS-3 deployments. With low expectations and a clear path to accelerating growth, we recommend buying the towers.”

January 29, 2016 |
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