Shares of American Tower (NYSE:AMT) opened 1.2 percent lower premarket yesterday after Wells Fargo Securities downgraded them to Market Perform from Outperform. AMT shares, however, are up 22.7 percent in the past three months and up 36.1 percent over the past six.
“Our tower dinner and data center broker events last week, seemed to
take a bit of air out of the balloons for Q1 strength for both of these
sectors,” said Jennifer Fritzsche, Senior Analyst, Wells Fargo
Securities. “Our new price target on AMT is $196. The only tower stock
we now are recommending is CCI; raising price target to $142. The towers
peers trade at 23.6x 2019E AFFO and 21.9x 2020E AFFO, by our estimates.
The multiples continue to push and set recent peak levels. Each of the
tower stocks are trading at forward year AFFO multiples are the highest
we have seen since 2017 (with AMT’s multiple at a 5-yr high),” she said.
Fritzsche said recent checks have indicated that while spending has
continued, it has not realized the growth that was hoped for in 2019.
She believes spending will ramp in 2020 but much has to be digested
before this can be seen. As a result, she believes the setup for tower
stocks should be viewed with a more conservative lens as her analysts
struggle to see near-term drivers for further multiple expansion from
these levels. Continue Reading