Cable One stock price target cut to $448 by TD Cowen

On Monday, TD Cowen analysts adjusted their outlook for Cable One (NYSE: CABO), reducing the company’s price target from $465.00 to $448.00 while maintaining a Hold rating on the shares. The stock, currently trading near its 52-week low of $250.08, appears undervalued according to InvestingPro analysis. The decision follows the company’s recent financial performance, which included mixed results in several key areas.

Cable One reported a slight underperformance in revenue and EBITDA for the fourth quarter of 2024, with EBITDA reaching $796.77M and revenue declining 5.87% year-over-year. The company demonstrated strong free cash flow yield of 26%, significantly above industry averages. The company was successful in stabilizing its Broadband Average Revenue Per User (ARPU), which is a significant metric indicating the average income generated per user. However, this was offset by a decline in broadband subscriber numbers. InvestingPro subscribers have access to 12 additional key insights about CABO’s financial health and market position.

In a statement, TD Cowen analysts noted the company’s resolution of its MBI call option issue and its capacity to manage the 2026 convertible debt. With a healthy current ratio of 1.31, the company maintains strong liquidity to meet its short-term obligations. Nevertheless, Cable One is still working on its Broadband "PxQ" revenue equation, which represents the product of price and quantity sold and is crucial for revenue generation in the broadband segment.

Management at Cable One has expressed optimism about Broadband revenue growth for 2025. Despite this, the company faces continued and intensifying competition in the market, which leaves the future balance of Broadband growth uncertain, as highlighted by TD Cowen’s analysis.

The recent financial report from Cable One underscores the ongoing challenges in the broadband industry and the company’s efforts to navigate a competitive landscape while striving for growth and maintaining financial stability.

In other recent news, Cable One reported disappointing fourth-quarter 2024 results, revealing a significant earnings miss. The company posted an earnings per share (EPS) of negative $18.71, starkly contrasting with the forecasted $9.38, alongside revenue of $387.2 million, which fell short of the expected $388.8 million. The company’s total revenues saw a 6% year-over-year decline, with residential data revenues decreasing by 5.4%, although business data revenues increased by 2.3%. Additionally, Cable One experienced a net loss of $105.2 million, compared to a net income of $103.5 million in the same period last year.

KeyBanc Capital Markets recently downgraded its price target for Cable One to $650 from $825 while maintaining an Overweight rating. This adjustment follows the company’s fourth-quarter results, which did not meet market expectations, including a 4,800 decline in high-speed data subscribers and a 7% year-over-year decrease in EBITDA. Despite these setbacks, KeyBanc analyst Brandon Nispel highlighted Cable One’s low market penetration, cash generation ability, and attractive valuation as reasons to maintain the Overweight rating.

The company’s strategic initiatives for 2025 focus on achieving broadband revenue growth and stabilizing average revenue per user (ARPU) through targeted product offerings. Cable One also plans to reduce capital expenditures to the low $300 million range. As part of its strategy, the company aims to leverage its network strength and operational efficiency to enhance customer experience and compete effectively in the market.

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