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On Friday, KeyBanc Capital Markets adjusted its perspective on Cable One (NYSE:CABO) shares, revising the price target downward to $650 from the previous target of $825. Despite this change, the firm maintained its Overweight rating on the company’s stock. According to InvestingPro data, the stock currently trades at an attractive P/E ratio of 6.7x and appears undervalued based on its Fair Value analysis.
The adjustment came after Cable One’s fourth-quarter results for 2024 fell short of market expectations. The company reported a decline of 4,800 high-speed data (HSD) subscribers and a year-over-year EBITDA decrease of 7%, both figures not meeting consensus estimates. The stock has reflected these challenges, declining over 25% year-to-date and currently trading near its 52-week low of $257.59. KeyBanc analyst Brandon Nispel expressed that while strategic initiatives undertaken by Cable One in the past year are acknowledged, and management’s confidence in achieving HSD revenue growth in 2025 is noted, the anticipated improvements have not yet been reflected in financial outcomes.
Nispel emphasized the rationale for continuing to endorse Cable One with an Overweight rating, citing three main reasons. First, the company’s low market penetration, which theoretically sets it up for future growth. Second, Cable One’s ability to generate cash, evidenced by its impressive 21% free cash flow yield. And third, the company’s attractive valuation multiple. InvestingPro analysis reveals additional strengths, including a decade-long history of consecutive dividend raises and a robust dividend yield of 4.4%.
The analyst also mentioned that with the resolution of the MBI-related concerns, Cable One now needs to focus on increasing its subscriber base to propel the stock price upward. The expectation is that the stock might experience limited movement in the near term as the company works on enhancing its execution.
KeyBanc’s new price target of $650 is based on an 8.2x multiple of Cable One’s projected 2026 adjusted EBITDA, indicating a more conservative outlook than previously held. The firm’s analysis suggests that while Cable One has potential, visible improvements in performance metrics are necessary for the stock to gain momentum. Subscribers to InvestingPro can access the comprehensive Pro Research Report for deeper insights into Cable One’s valuation metrics, financial health scores, and growth potential among 1,400+ top US stocks.
In other recent news, Cable One Inc . reported disappointing financial results for the fourth quarter of 2024. The company posted a significant earnings miss, with earnings per share (EPS) at a negative $18.71, far below the forecasted $9.38. Revenue also fell short of expectations, coming in at $387.2 million against the anticipated $388.8 million. The company reported a net loss of $105.2 million, contrasting sharply with a net income of $103.5 million in the same period the previous year. Despite these results, Cable One managed to reduce capital expenditures from $115.6 million in Q4 2023 to $71.9 million in Q4 2024. The residential data segment faced challenges with a 5.4% decline in revenues, while the business data segment showed a 2.3% increase. Looking forward, Cable One aims for organic broadband revenue growth in 2025 and plans to maintain capital expenditures in the low $300 million range.
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