Benchmark raises Charter stock target to $475, maintains Buy rating

On Monday, Benchmark analyst Matthew Harrigan updated the price target for Charter Communications (NASDAQ:CHTR), increasing it to $475 from the previous target of $450, while reiterating a Buy rating on the stock. The company, currently trading at $380.25 with a market cap of nearly $60 billion, appears undervalued according to InvestingPro analysis. Analyst targets for the stock range from $273 to $540, reflecting diverse market opinions. Harrigan highlighted Charter’s success in executing a price-led strategy with a product offering that resonates with cost-conscious consumers in the U.S. The company’s significant growth in mobile lines, which saw an addition of over 500,000, was underscored as a key growth driver.

Charter’s revenue remained steady at $55.1 billion, aligning with the analyst’s projections, but the company’s EBITDA of $22.2 billion, showing 4.8% growth, exceeded expectations by 3.2%. InvestingPro data reveals the company maintains a healthy gross profit margin of 55% and trades at an attractive P/E ratio of 10.5x. Despite losing 60,000 broadband customers, the outlook for the year is positive, with anticipated improvements and a likely stabilization in broadband units, although a slight decline is still expected for the year. The decline in video units was also noted, with a loss of 181,000, which is an improvement over the 405,000 lost in the first quarter of 2024.

The report also mentioned that Charter’s results are yet to fully reflect the benefits of integrating linear and streaming apps, which are expected to provide enhanced experiences and value for customers. InvestingPro analysis highlights Charter as a prominent player in the Media industry, with multiple positive indicators including significant recent momentum, as evidenced by its impressive 15.9% return over the past week. Subscribers can access additional ProTips and comprehensive financial analysis through the Pro Research Report. The company has been recognized for its effective optimization of pricing and packaging across broadband, mobile, and video services. Notably, Charter’s full gig attach rate has nearly doubled compared to the previous year. The analyst emphasized that both broadband and mobile services from Charter feature no contracts and offer price locks when bundled, catering to the current consumer demand for flexibility and price certainty.

In other recent news, Charter Communications reported its Q1 2025 earnings, slightly surpassing both EPS and revenue forecasts. The company achieved an EPS of $8.42 against a forecast of $8.41, and revenue reached $13.7 billion, exceeding the expected $13.67 billion. RBC Capital, responding to these results, raised Charter’s stock target to $395, citing improved internet ARPU trends and cost efficiencies, though the firm maintained a Sector Perform rating due to anticipated broadband competition. KeyBanc Capital Markets reiterated its Overweight rating with a $500 price target, expressing confidence in Charter’s strategic positioning despite a shortfall in broadband subscriber growth. Loop Capital Markets also adjusted its price target for Charter, increasing it to $430 while maintaining a Hold rating, highlighting the company’s improved EBITDA growth and lower-than-expected capital expenditures. Charter’s management has indicated a projected peak in capital expenditures by 2025, with a significant rise in free cash flow expected in subsequent years. The company continues to experience growth in its mobile services, which remain a primary driver in its bundled offerings.

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