Wall Street’s Take on American Tower’s Results

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bullLast week American Tower reported total revenue soared more than 22 percent to $1.28 billion in its fourth quarter ending December 31, 2015. Per share earnings were $1.27, and the future was bright. For the most part, even Wall Street analysts were impressed with the report card. UBS telecom analyst Batya Levi characterized American Tower’s performance as “balanced growth and yield at an attractive price.” She also noted that the international conglomerate’s “fourth quarter results were ahead, largely driven by upside in the international business,” which she noted is accelerating fast enough to offset the expected slowdown in domestic business. “U.S. organic growth was 5.2% in the fourth quarter, driving 6.6% growth for 2015, in line with management’s 6-8% LT growth target. Management expects growth to slow to 5.5% in 2016, or 6.0% ex non-run rate items. We continue to believe there is upside to trends driven by AT&T’s WCS rollout, AWS-3 deployments, FirstNet and inclusion of the Verizon’s portfolio (28% of mix with 9%+ growth),” she wrote in an investment note Monday. “Meanwhile, American Tower stands to benefit from its geographic diversification and accelerating international growth. This will drive similar growth for the overall business of ~7% in 2016 vs. 7.6% last year.” 

Levi has a “buy” rating on American Tower (NYSE: AMT) and a 12-month price target of $115. AMT shares increased $2.17 or 2.40 percent to close at $92.18.

Barclays Amir Rozwadowski said American Tower’s 4Q results “came in better than expected on all metrics, driven by steady domestic demand and healthy international activity. In our view, the combination of solid 4Q results and an encouraging 2016 outlook seem to suggest the pieces to capitalize on gradually improving demand trends are coming together.” Rozwadowski feels that the company’s tower business in Brazil “remains a near-term concern” but notes that “management expects international growth rates to accelerate in 2016 (+100bps year-to-year) given strong secular demand trends in Mexico and India.” He adds, “We believe that over the mid-to-longer term steady improvement in the U.S., healthy international demand trends (in aggregate) and the prospect for margin improvement in the latter post the close of the Viom deal should serve as positives for the company.” His rating on the issue is “Overweight/Neutral” and raised the Barclays price target to $109.

EvercoreISI analyst Jonathan Schildkraut called AMT’s results “robust…  ahead of our estimates by 2.0%, 2.4%, and 3.8%, respectively.”  But he did not like the company’s vision of the future. “The FY16 FX outlook was worse than expected. We had estimated roughly $180 million of site leasing currency headwinds in 2016, but based on AMT’s guide, the company expects FX headwinds to site leasing, EBITDA, and AFFO of roughly $258 million, $140 million, and $122 million, respectively.” He maintains his “buy” rating on the stock and has a target price of $105 a share.

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