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On Thursday, BofA Securities analyst Alex Waters (NYSE:WAT) took over coverage of Crown Castle (NYSE:CCI), assigning a Neutral rating to the company’s stock with a price target adjustment to $110 from the previous target of $115. According to InvestingPro data, the stock has shown strong momentum with an 11.6% return over the past week and currently trades at $104.35. The stock’s RSI suggests it’s in overbought territory, with analyst targets ranging from $90 to $125. The revision follows Crown Castle’s fourth-quarter 2024 performance, which fell short of both BofA and general market expectations. The quarter also marked the end of a strategic review for Crown Castle’s fiber solutions business, culminating in its sale to a consortium comprising EQT (ST:EQTAB) and Zayo for a total of $8.5 billion.
Zayo is set to acquire the fiber business, while EQT will take over the small cell operations. The transaction is anticipated to be finalized in the first half of 2026, with an expected close in the first quarter. Starting in the first quarter of 2025, Crown Castle will categorize the fiber segment as "discontinued operations," and the company’s 2025 guidance will largely exclude contributions from this segment.
Waters updated estimates to reflect the fourth-quarter results, the impending sale of the fiber business, and insights from management. The analyst suggests that Crown Castle is now on more stable ground following the strategic review, the divestiture of the fiber segment, and adjustments to the dividend. InvestingPro analysis shows the company maintains a 6% dividend yield and holds a prominent position in the Specialized REITs industry, though its current ratio of 0.5 indicates short-term obligations exceed liquid assets. The report maintains a Neutral stance, awaiting further developments in the closure of the fiber sale and potential signs of increased activity from domestic carriers.
The new price objective of $110 is based on an approximately 22 times estimated 2026 adjusted funds from operations (AFFO) multiple, which represents a premium compared to the approximate 19 times multiple for the real estate investment trust (REIT) sector. BofA Securities also adjusted Crown Castle’s income rating to 7, indicating the same or higher expectations, from a previous rating of 8, which suggested the same or lower expectations. InvestingPro offers additional insights through its comprehensive Pro Research Report, one of 1,400+ available reports that provide deep-dive analysis of top stocks. Subscribers can access 8 more exclusive ProTips and detailed financial metrics for Crown Castle.
In other recent news, Crown Castle Inc. has announced the sale of its fiber and small cell business to Zayo Group Holdings Inc. and EQT Active Core Infrastructure Fund for $8.5 billion. The transaction, expected to close in the first half of 2026, follows a strategic review and aims to streamline Crown Castle’s operations to focus on its U.S. tower assets. This move has led to Fitch Ratings placing Crown Castle’s ’BBB+’ ratings on Rating Watch Negative, anticipating a potential downgrade due to increased leverage. Similarly, S&P Global Ratings has put Crown Castle’s ratings on CreditWatch negative, citing concerns over the company’s plan to raise its net leverage target. Moody’s has also changed Crown Castle’s outlook to negative while affirming its Baa3 ratings, reflecting potential leverage and coverage metric deterioration.
Despite these concerns, Wolfe Research has upgraded Crown Castle’s stock rating from ’Underperform’ to ’Peer Perform,’ highlighting the sale as a positive step towards sustainable growth. Jefferies has adjusted the stock price target to $90, maintaining a Hold rating, and noted that the sale exceeded market expectations. Crown Castle plans to use the sale proceeds for debt repayment, a $3 billion share repurchase program, and potential acquisitions. The company has also announced a 32% reduction in its dividend, starting in 2025, as part of its financial restructuring efforts. These recent developments are being closely monitored by investors and analysts for their impact on Crown Castle’s financial performance and strategy.
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