How are energy investors positioned?
On Monday, BofA Securities began coverage on shares of American Tower Corporation (NYSE:AMT), assigning a Buy rating and setting a price target of $255.00. The firm’s analyst noted American Tower as the top choice within the tower sector, anticipating that it will command a premium compared to the broader Real Estate Investment Trust (REIT) market. With a market capitalization of nearly $100 billion and an "GOOD" overall financial health score according to InvestingPro, the company stands as a prominent player in the Specialized REITs industry. The recommendation reflects a positive outlook based on several key factors.
The analyst highlighted American Tower’s leading adjusted funds from operations (AFFO) per share growth, the stability provided by its holistic Master Lease Agreement (MLA) structure in the domestic market, the absence of churn from Sprint after the third quarter of 2025, and the company’s diversified international presence and data center exposure. Supporting this positive outlook, the company has maintained dividend payments for 15 consecutive years, with a current dividend yield of 3.2% and recent dividend growth of approximately 5%. These elements collectively contribute to the Buy rating.
American Tower’s performance is also expected to benefit from lower interest rates, which could act as a catalyst for both stock performance and upward revisions in earnings estimates. This is due to the potential decrease in interest expenses, which would favorably impact the company’s financials.
The price objective of $255.00 is based on a 23 times multiple of the projected 2026 AFFO per share, which represents a premium over American Tower’s three-year average multiple of approximately 21 times. Additionally, it stands above the 19 times multiple that is typical for the REIT sector, underscoring the analyst’s confidence in American Tower’s superior market position and growth prospects.
BofA Securities’ valuation reflects an optimistic view of American Tower’s strategic positioning and financial health, suggesting that the stock may offer an attractive investment opportunity in the eyes of the firm. The company’s strong market position is reflected in its robust gross profit margin of 74.5% and year-to-date price return of 17.3%. For deeper insights into AMT’s valuation and growth prospects, including exclusive Fair Value analysis and additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, American Tower Corporation reported its Q1 2025 earnings, surpassing revenue expectations with $2.56 billion against a forecast of $2.54 billion. However, earnings per share fell short, coming in at $1.04 compared to the anticipated $1.6. Despite this, the company demonstrated strong revenue growth driven by international operations and data center innovations, with an adjusted EBITDA margin increase to 68.2%. In a separate development, Moody’s Ratings affirmed American Tower’s Baa3 rating and upgraded its outlook to positive, citing improved earnings stability and a strategic shift towards developed markets. Additionally, Scotiabank (TSX:BNS) raised American Tower’s price target to $248, maintaining an outperform rating due to the company’s robust performance and revenue growth. The firm’s management has also successfully reduced its leverage to 5.0x, aligning with their target range and potentially allowing capital returns to shareholders. American Tower’s liquidity remains strong, with 96% availability on its $10 billion revolving credit facilities, and the company plans to refinance most of its remaining debt maturities in 2025 and 2026.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.