Michael Rollins, an analyst from Citi, reiterated the Hold rating on Charter Communications (CHTR – Research Report). The associated price target was lowered to $280.00.
Michael Rollins has given his Hold rating due to a combination of factors relating to Charter Communications’ recent performance and future outlook. The company’s first-quarter results indicated a decline in core broadband subscribers, which is expected to continue, especially with the likely end of the Affordable Connectivity Program (ACP) in the second quarter of 2024. Rollins notes that while the sell-side expectations are beginning to account for the long-term risks to broadband volume, there may be undue optimism regarding Charter’s projected EBITDA for 2025. This optimism does not fully account for the potential carryover effects from the ACP, the absence of heightened political advertising revenue in the off-year, and a faster pace of video revenue decline, which currently contributes to Charter’s margins. The combination of these factors led to a revised target price and a continued neutral stance on the stock.
Furthermore, Rollins anticipates that the headwinds for Charter and the cable industry will be exacerbated by a slowing broadband subscriber growth, increased competition from expanding fiber networks, and value-based Fixed Wireless Access. Charter’s decision to extend the ACP support through May with a $15 subsidy also introduces risks of disconnections and price reductions that may not become fully apparent until later in the year. The full impact of the ACP discontinuation is expected to be felt in the third quarter of 2024 rather than the second. The moderation of these headwinds is not foreseen until early 2025, which contributes to the cautious Hold rating on Charter Communications.
In another report released on April 26, Wells Fargo also maintained a Hold rating on the stock with a $260.00 price target.
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Charter Communications (CHTR) Company Description:
Founded in 1993, Charter Communications, Inc. provides cable and broadband communications services to more than 30 million customers in the United States through its Spectrum brand. The company’s services include internet access, data networking, video programming, voice communications, and local advertising services. The company also provides regional sports networks and local sports, news, and original programming to its customers. The company is headquartered in Stamford, Connecticut.
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