SBA’s “Solid” Report Card

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SBA reported “solid” 4Q18 headline results, according to market analyst Colby Synesael of Cowen.  He cited the towerco’s guidance being in-line with their estimates for 2019 but below ‘the Street’ consensus.

“While guidance is likely to be viewed as disappointing, we believe the fundamental backdrop remains positive,” Synesael said. 

“As such, while the stock is likely to trade sideways in the NT we expect continued multiple expansion over the LT and a ~10% AFFO/shr five year CAGR and thus remain constructive.”

Jennifer Fritzsche, Senior Analyst of Wells Fargo Securities said SBA’s results were “impressive” and reflective of a “disciplined strategy.” She noted domestic carrier activity remained elevated in Q4, with big four carriers contributing 84 percent of incremental revenue in the quarter.  

“DISH also allegedly continued to actively deploy its network though we suspect the contribution to SBAC financials are still somewhat immaterial,” Fritzsche said.  “International leasing remained strong in Q4, with leasing revenue growth of 11.3%, or 10.3% net of 1.0% churn. We remain on the sidelines as SBAC’s ~2.0x premium to its peers on a P/AFFO basis fully reflects the quality of the smallest, but most disciplined, tower company, in our view,” she said.

Synesael said revenue, EBITDA, and AFFO/share were all “solid” as well and, in this case, ahead of the Street. The lower guidance, Synesael said, is largely a result of slower-than-expected demand and higher-than-expected churn within its U.S. business.

“Specifically management noted that while it expects U.S. leasing activity to remain relatively stable with levels in 2H18, which were up from 1H18, it acknowledged that demand was more likely to level out here as opposed to further accelerate, while normalized churn is also expected to increase to 1.0-1.5% vs. ~1.0% in 2018,” he said.  Comments? Email Us.

February 25, 2019

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