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On Tuesday, BMO Capital Markets adjusted its outlook on American Tower Corporation (NYSE:AMT), reducing the price target to $210 from $230, while continuing to endorse the stock with an Outperform rating. The firm’s analyst cited a mix of challenges and growth opportunities that are expected to shape the company’s performance in the near future. According to InvestingPro data, AMT currently offers a 3.5% dividend yield and has maintained dividend payments for 14 consecutive years, demonstrating consistent shareholder returns despite market fluctuations.
American Tower, which is recognized for its extensive portfolio of communication towers, is seen by BMO Capital as the leading pick in the Tower sector. The company is praised for its sector-leading growth, international diversity, and approximately 10% exposure to data centers. InvestingPro analysis confirms AMT’s strong market position, with a "GOOD" overall financial health score and robust revenue growth of 8.84% over the last twelve months. Additionally, it is noted for experiencing less customer turnover compared to its peers and for its improving financial leverage, which stood at 5.2 times in the third quarter.
The analyst pointed out that American Tower has reported an uptick in domestic carrier activity. However, there are several factors that could pose headwinds in 2025, including the residual effects of Sprint’s churn, a weaker performance in Latin America, and the dilution resulting from the sale of its operations in India.
For the fourth quarter of 2024 and the full year 2025, BMO Capital forecasts net organic growth in the United States at 4.0% and 4.4%, respectively. International growth is projected to be slightly higher at 4.9% for the fourth quarter of 2024, increasing to 5.2% in 2025. Despite these positive growth projections, the firm anticipates foreign exchange headwinds to negatively impact 2025 results by approximately 0.5%.
With regards to financial performance, BMO Capital estimates that American Tower’s adjusted funds from operations (AFFOps) will be $2.30 for the fourth quarter of 2024 and $10.45 for the full year 2025. This represents a slight year-over-year decline of 0.7%. These figures are slightly below the consensus estimates of $2.35 and $10.53 for the same periods, respectively, and also below American Tower’s previous indications for 2025, which were around $10.50, excluding the impact of foreign exchange fluctuations. For investors seeking deeper insights, InvestingPro offers comprehensive analysis including 8 additional ProTips and a detailed Pro Research Report, providing valuable context for AMT’s valuation and growth prospects.
In other recent news, American Tower Corporation has made significant financial moves. The company has extended the maturity dates of its multicurrency senior unsecured revolving credit facility and unsecured term loan to January 28, 2028, and its senior unsecured revolving credit facility to January 28, 2030. These amendments, part of the company’s financial management strategy, are aimed at providing continued flexibility in its capital structure.
In addition, American Tower has issued $1.2 billion in senior unsecured notes, with the intention of utilizing the net proceeds to repay existing debt. The two tranches of debt include $600 million of 5.000% senior notes due in 2030 and $600 million of 5.400% senior notes due in 2035. Interest on these notes will be payable semi-annually.
These are recent developments that provide insight into the company’s ongoing financial management strategy. While the company continues to expand its portfolio of communication sites, these financial adjustments are key in maintaining flexibility and managing debt. These facts are based on recent Securities and Exchange Commission filings and press releases issued by American Tower Corporation.
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