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Investing.com - Oppenheimer downgraded Charter Communications (NASDAQ:CHTR) from Outperform to Perform on Tuesday, removing its $500 price target amid concerns over the company’s declining broadband business. The stock currently trades at $222.20, down over 42% in the past six months and hovering near its 52-week low of $214.83.
The downgrade follows Charter’s third-quarter results showing revenue declined 0.9% year-over-year to $13.7 billion, with EBITDA falling for the first time to $5.6 billion, missing Oppenheimer’s $5.7 billion estimate. The earnings miss was attributed to higher operating expenses related to investments in Charter’s new go-to-market strategy. Despite these challenges, InvestingPro data shows Charter maintains a healthy annual EBITDA of $22.09 billion and trades at a low P/E ratio of 6.01, suggesting the stock may be undervalued relative to its earnings power.
Oppenheimer acknowledged Charter’s successful video strategy but noted this positive development is overshadowed by the secular decline in its broadband subscriber base. The firm believes Wall Street estimates for Charter appear too optimistic for the next five years. This sentiment aligns with InvestingPro data showing 8 analysts have recently revised their earnings expectations downward for the upcoming period, though Charter remains profitable with a diluted EPS of $36.10.
The broadband business faces mounting pressure from multiple fronts, including AT&T’s aggressive entry into fixed wireless, accelerating fiber share gains by competitors, a lack of DSL subscribers to convert, and emerging satellite competition.
Oppenheimer also expressed concern about Charter’s high leverage and potential integration challenges from its planned merger with Cox scheduled for next year.
In other recent news, Charter Communications reported its third-quarter 2025 earnings, which fell short of analyst expectations. The company announced an earnings per share (EPS) of $8.34, below the anticipated $9.27, and revenue of $13.67 billion, which did not meet the forecasted $13.75 billion. This underperformance has raised concerns among investors and analysts alike. Following these results, KeyBanc Capital Markets downgraded Charter Communications from Overweight to Sector Weight, citing missed expectations in residential revenue and subscriber trends. Similarly, Bernstein SocGen Group downgraded the company to Market Perform, highlighting increased competition from fixed wireless access providers and fiber expansion by competitors. Pivotal Research also adjusted its outlook, significantly lowering the price target to $300 from $480 while maintaining a Buy rating. The firm noted Charter’s accelerating data subscriber losses and worse-than-expected revenue and EBITDA declines. These developments mark a challenging period for Charter Communications amid competitive pressures in the telecommunications market.
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