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On Tuesday, BMO Capital Markets maintained their Market Perform rating on SBA Communications (NASDAQ:SBAC) shares with a steady price target of $220.00. According to InvestingPro data, the stock appears slightly overvalued at its current price of $212.84, with analysts’ targets ranging from $210 to $280. The assessment by BMO Capital analyst Ari Klein followed the company’s fourth-quarter results, which showed solid adjusted funds from operations (AFFOps), but provided a 2025 guidance that did not meet expectations.
Klein noted that while carrier activity is on an upswing, which is anticipated to offer growth momentum into 2026, the guidance for domestic leasing from SBA Communications was somewhat underwhelming. With a robust gross profit margin of 77.5% and EBITDA of $1.79 billion in the last twelve months, the company’s international markets are currently facing challenges due to customer turnover, with no clear indications of an imminent turnaround.
Despite a generally positive environment and low market expectations, Klein expressed skepticism about significant growth in adjusted funds from operations per share before 2027. InvestingPro analysis reveals several positive factors, including expected net income growth and a PEG ratio of 0.85, suggesting attractive valuation relative to growth. However, Klein pointed out the lack of immediate catalysts that could drive the stock’s performance in the near term. Get access to 7 more exclusive InvestingPro Tips and comprehensive analysis through the Pro Research Report.
SBA Communications’ fourth-quarter performance indicated a resilient operational standing, but the outlook for the next few years suggests that investors may not see substantial earnings growth for some time. The company’s international operations, in particular, are struggling with customer retention issues that have yet to be resolved.
As the market digests this information, SBA Communications’ stock will continue to be observed by investors for any signs of change that could influence the company’s long-term financial trajectory. BMO’s stance reflects a cautious optimism, acknowledging improvements in carrier activity but tempering expectations due to the company’s conservative growth guidance and current international market challenges.
In other recent news, SBA Communications reported its fourth-quarter 2024 earnings, revealing an adjusted funds from operations (AFFO) per share of $3.46, surpassing both Jefferies and consensus estimates. However, the company’s earnings per share (EPS) of $1.61 fell short of the forecasted $2.11. Despite the EPS miss, SBA Communications highlighted its record low net debt to adjusted EBITDA ratio and plans for infrastructure expansion in 2025, including the construction of 800 new towers. The company also anticipates domestic and international new lease and amendment billings to reach up to $39 million and $18 million, respectively, in 2025.
Analysts have shown varied responses to these developments. KeyBanc Capital Markets maintained an Overweight rating on SBA Communications, confident in its potential growth due to improving leasing trends and expected policy changes. Jefferies, however, raised its price target to $221 while maintaining a Hold rating, citing the company’s cautious 2025 guidance. Meanwhile, JMP Securities reiterated a Market Outperform rating with a $250 price target, noting SBA Communications’ impressive revenue guidance for 2025.
SBA Communications also announced strategic shifts, including exiting operations in the Philippines and Colombia, while entering an agreement to purchase approximately 7,000 towers from Millicom. This transaction is expected to position SBA (LON:SBA) as a leading tower operator in Central America. The company’s management remains optimistic about future opportunities, particularly with the anticipated growth in 5G network rollouts and fixed wireless broadband.
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