Analyst Sebastiano Petti from J.P. Morgan maintained a Hold rating on Charter Communications (CHTR – Research Report) and keeping the price target at $335.00.
Sebastiano Petti has given his Hold rating due to a combination of factors that suggest a cautious approach to Charter Communications’ stock. Petti notes the persistent competition in the broadband market and softer trends in organic broadband growth, which are expected to challenge the company’s performance. The anticipated conclusion of the Affordable Connectivity Program (ACP) is also expected to impact broadband subscriber numbers and earnings before interest, taxes, depreciation, and amortization (EBITDA) negatively in 2024, although this is not projected to pose a threat to the company’s balance sheet or lead to a debt downgrade. Despite this, he anticipates that any reduction in capital returns to manage the company’s leverage profile might be met with disapproval from equity investors.
Additionally, Petti observes that while investments in the Rural Digital Opportunity Fund (RDOF), other network expansions, and a heightened emphasis on cost reduction could make the stock more compelling as the ACP-related headwinds subside, the persistent uncertainty surrounding ACP could make it challenging to support the stock in the near term, leading to his decision to add Charter to the Negative Catalyst Watch list. He also addresses scenarios where a higher-than-expected churn or retention credits could further pressure financials and the stock price, but he believes that management has levers to mitigate these risks, such as adjusting share repurchases to maintain a reasonable leverage ratio.
According to TipRanks, Petti is an analyst with an average return of -4.7% and a 44.74% success rate. Petti covers the Communication Services sector, focusing on stocks such as Charter Communications, BCE, and Telus.
In another report released on April 16, Deutsche Bank also maintained a Hold rating on the stock with a $320.00 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.
