With the second quarter behind us, Amir Rozwadowski of Barclays recently updated investors on the firm’s outlook for the future, and it’s looking bright. It seems to have been a slow year thus far, but analysts are optimistic that the second half of 2015 will be busy. Rozwadowski explained that AT&T, Verizon, and Crown Castle provide the highest yield. “AT&T and Verizon have a more mature business model and have had the highest yield in our sector over the last three years. One of the key factors that bear monitoring is that both Verizon and AT&T can be viewed as bond-like securities and therefore tend to underperform when interest rates go up. Thus the pace of interest rate hikes need to be kept in mind – for good or bad – when considering these names,” Rozwadowski wrote. The analyst also noted that they believe there are several names within our coverage universe that have a propensity for an improving outlook in the next few quarters due to a variety of factors including organic demand improvement, benefits from M&A, and exposure to improving secular demand themes. Rozwadowski highlighted their thoughts for each tower company:
American Tower: Based on our ongoing checks, we continue to believe that the set up for a better demand environment for the tower industry continues to build. While international exposure will remain a near-term overhang, with 75% of rental and management operating income coming from the U.S., AMT remains poised to benefit from a regionally improving demand.
Crown Castle: We continue to believe that the set up for a better demand environment for the tower industry continues to build. Coupled with rising interest in its outdoor small cell solutions should enable the company to deliver an improving earnings outlook.
SBA Communications: We continue to believe that the set up for a demand environment for the tower industry continues to build. In our view, SBAC remains well positioned to capitalize on this trend, particularly at AT&T where the lack of an MLA should allow the company to capitalize on any recovery in spending at the cell site. We also believe SBAC’s recent $1.0B buyback authorization provides support to delivering 15-20% AFFO growth for the foreseeable future. View the entire report here.