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Investing.com - HSBC downgraded American Tower (NYSE:AMT), a prominent player in the Specialized REITs industry with a market cap of $100.5 billion, from Buy to Hold on Wednesday, while lowering its price target to $235.00 from $245.00, citing a lack of strong catalysts for the company in the near term. According to InvestingPro data, the company trades at a P/E ratio of 41.9x, suggesting a premium valuation.
The research firm updated its cost of equity assumptions in line with HSBC’s strategists’ latest outlook, raising the risk-free rate to 4.25% from 3.75% and adjusting the market risk premium to 4% from 4.25%, while maintaining a levered beta of 0.8.
These changes resulted in an increased weighted average cost of capital (WACC) of 6.3%, up from the previous 6.1%, while the terminal value growth rate remained unchanged at 2.1%.
HSBC specifically noted the "marginal lowering of US organic billings growth guidance for FY25" as a factor in its decision to downgrade the stock.
The new price target of $235 implies approximately 9% upside potential, which HSBC deemed insufficient to maintain a Buy rating given the current outlook.
In other recent news, American Tower Corporation reported its second-quarter 2025 earnings, which showed a notable miss in earnings per share (EPS) against expectations. The EPS was reported at $0.78, significantly below the forecasted $1.68, marking a 53.57% negative surprise. However, the company’s revenue slightly exceeded expectations, reaching $2.63 billion compared to the anticipated $2.59 billion. Despite these mixed results, American Tower demonstrated core organic revenue growth of 4.7%, indicating solid performance amid concerns about potential slowdowns in carrier activity. JMP Securities maintained its Market Outperform rating and a $260 price target on the company, highlighting its advantageous position in global network expansions. Meanwhile, BMO Capital adjusted its price target for American Tower to $245 from $250, while keeping an Outperform rating, acknowledging the company’s strength in international markets, data centers, and services segments. These developments reflect the company’s current financial landscape and strategic positioning in the telecommunications sector.
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