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On Friday, JMP Securities analysts maintained a Market Outperform rating and a $115.00 price target for Crown Castle (NYSE:CCI), which currently trades at $95.09. The prominent Specialized REITs player, with a market cap of $41.3 billion, reported its fourth-quarter 2024 earnings later than usual due to the announcement of its fiber and small cell business sale for $8.5 billion. According to InvestingPro analysis, the company appears overvalued at current levels, with analyst price targets ranging from $84 to $135. The deal’s value was at the lower end of market expectations, especially at a time when analysts anticipate mobile carriers will increasingly focus on local network densification, potentially leading to higher growth for such assets than seen in the previous five years.
Despite the lower-than-expected sale price, Crown Castle’s guidance for tower revenue growth in 2025 is 4.5%, which is slightly below JMP Securities’ estimate of 5.0-6.0%. The company maintains a healthy 72.15% gross profit margin and offers an attractive 6.69% dividend yield. This projection did not disappoint investors as much as feared, with the company’s stock rising approximately 4.0% in after-hours trading. InvestingPro subscribers can access additional insights, including 6 more exclusive ProTips and comprehensive financial metrics.
The completion of the strategic review and the sale of the fiber and small cell business mark the end of a period of uncertainty for Crown Castle. The company had been involved in a proxy fight at the beginning of 2024, but with that now resolved and a new top management team in place, Crown Castle is expected to refocus on its core domestic tower operations. With an overall financial health score of GOOD from InvestingPro and three analysts revising earnings upward for the upcoming period, the company appears positioned for stability. JMP Securities analysts believe this will allow the company to avoid further distractions from the fiber business, which they suggest was not as well understood by management compared to the tower business. Discover Crown Castle’s complete financial story in the exclusive Pro Research Report, available to InvestingPro subscribers.
In other recent news, Crown Castle has reported its fourth-quarter 2024 earnings, showing a 4.5% consolidated organic growth for the year. The company achieved this despite a $5 billion goodwill impairment charge, which was attributed to strategic changes in their fiber and small cell development plans. Crown Castle also announced significant structural cost reductions amounting to $100 million annually and a $200 million reduction in net capital expenditures compared to previous forecasts. In a strategic move, Crown Castle plans to sell its Fiber/Small Cell business for $8.5 billion to Zayo and EQT (ST:EQTAB), with the transaction expected to close between 2026 and 2026. The proceeds will be used to reduce debt by approximately $6 billion and fund $3 billion in stock buybacks. Analysts have reacted positively to these developments, with Raymond (NSE:RYMD) James upgrading Crown Castle’s stock rating to Strong Buy, and KeyBanc Capital Markets upgrading it to Overweight. Both analysts highlighted the company’s transformation into a pure-play U.S. tower company and anticipated operational improvements. Crown Castle’s strategic shift and financial maneuvers, including a planned reduction in annual dividends, have sparked optimism among investors and analysts alike.
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