Tower industry analysts don’t always see things the same way and American Tower’s (AMT) first quarter results were no exception. A trio of veteran stock market researchers offered opinions ranging from “strong” to “lackluster.”
Colby Synesael of Cowen was in the latter category, reporting AMT’s Q1 results as “lackluster” although he noted they increased their 2021 guide for EBITDA/AFFO by gaining in higher services revenues.
“While we continue to expect upside to AFFO per share,” Synesael said, “post the close of Telxius, upside Services revenue furthers our conviction that gross organic growth will accelerate into 2022. Given its current valuation relative to peers, we continue to highlight AMT as our favorite tower idea.”
Eric Luebchow, of Wells Fargo Securities said AMT delivered solid Q1 results that topped their estimates and slightly increased 2021 guidance despite increased FX headwinds.
“The guide includes incremental straight-line revenue from its MLA with DISH,” Luebchow said, “as well as expected Sprint churn throughout the year, but does not include contributions from the close of its Telxius acquisition, which is expected to occur in metered closings across Q2 and Q3.”
Luebchow said AMT has plans to leverage its balance sheet, ticking net leverage higher to the high-5.0x range, which, he said, was expected, while also striking agreements with private capital partners for minority stakes in its European segment, and complementing it with equity issuance.
“While the mix of private capital and equity remains an open question mark,” he said, “we expect to learn more in the coming weeks ahead of the anticipated close of the first tranche sometime in Q2. We reiterate our Overweight rating and are increasing our price target to $275 from $245.”
Spencer Kurn with New Street Research saw AMT’s results strong as well, citing that EBITDA and AFFO per share were significantly ahead. Kurn said site rental revenue was only in-line due to FX pressure. “Excluding FX,” he said, “it would have been ahead as well. Management modestly raised 2021 guidance for EBITDA and AFFO per share; but modestly lowered revenue guidance due to FX.”
Kurn said it was similar to guidance from CCI and SBAC this quarter, with AMT leaving guidance for organic growth unchanged.
“AMT’s results, in conjunction with those from CCI and SBAC, confirm that activity levels are rising sharply as carriers accelerate 5G deployments. The elevated leasing activity will likely convert into revenue later this year, which could provide a source of modest upside to guidance as the year progresses. More importantly, it sets up 2022 and 2023 for robust growth, which we believe will be greater than consensus expects,” Kurn said.
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