Crown Raises No Eyebrows With First Quarter Earnings

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Following Wednesday’s release of first quarter earnings in 2019, Crown remained at a neutral rating for Robet Gutman of Guggenheim with results “largely as expected” and the company remaining on track to achieve full year expectations.

“Site leasing revenues and adjusted EBITDA were 0.2 percent and 0.4 percent below our estimates (effectively inline),” Gutman said, “while AFFOs came in 2.3 percent ahead driven by lower than estimated restructuring and interest expense.”  Network services revenue of $207MM were 12 percent ahead of their estimate, he said.

Nick Del Deo of MoffettNathanson said while “The Big Three” tower operators remain stellar assets with outstanding fundamental attributes, “it’s hard to paint a case for much upside. The idea is not that one should be bearish on the group,” Del Deo said, “but one can make a case that leasing activity over the medium-term is likely to crest in 2019, which could dampen enthusiasm for the shares,” he said. “The case for outperformance from here appears to rely on some sort of pop from 5G and/or a lasting revaluation of the multiples, perhaps driven by a new class of investors like REIT or infrastructure-focused funds,” he said. “More prosaically, we’ve heard arguments that towers are being viewed as a new “blue chips” with defensive attributes that portfolio managers are willing to pay up for.”

Colby Synesael of Cowen said Crown reported good 1Q19 results including in-line Site Rental Revenue (SRR) and EBITDA and upside AFFO/share “and as expected maintained 2019 guidance.” On a segment level, Synesael said, “the company modestly beat our Towers SRR estimate and missed our Fiber SRR estimate and meaningfully beat our Towers Services/Other revenue.”

April 19, 2019

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