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On Wednesday, UBS analyst John Hodulik maintained a Neutral rating on Charter Communications (NASDAQ:CHTR) shares with a steady price target of $400.00. Currently trading at $382.22, the company, with its substantial $60.47B market cap, is set to report earnings on April 25. Hodulik anticipates the first quarter results to show some improvement in broadband losses following the Affordable Connectivity Program (ACP) and a modest increase in EBITDA, building upon the company’s impressive $21.89B EBITDA from recent quarters. InvestingPro analysis suggests the stock is trading at fair value, with additional insights available in the comprehensive Pro Research Report. The projection is set for flat revenue and a 1.0% year-over-year rise in EBITDA for the first quarter, which is an adjustment from the previous estimates of -0.4% and +0.3%, respectively. These figures are slightly below the consensus estimate of flat revenue growth and a 1.3% increase in EBITDA. With current annual revenue of $55.09B and a P/E ratio of 10.49, InvestingPro identifies Charter as trading at an attractive valuation relative to its near-term earnings growth potential.
The analyst expects Charter’s revenue to remain unchanged year-over-year in 2025, while EBITDA is projected to grow by 1.0%. This growth is anticipated to come from the implementation of new plans and cost efficiencies that could help balance the continuous loss of broadband subscribers and the reduction of high-margin political ad revenues. Despite these factors, the forecast suggests a decline in free cash flow per share to approximately $20 in 2025, down from $26 in 2024. This decline is attributed to increased capital expenditures and working capital drag.
Hodulik also mentioned that Charter’s stock buyback activity was limited in January and February. However, an increase in buybacks is expected in March following the completion of the Liberty Broadband (NASDAQ:LBRDA) transaction. UBS estimates that Charter will buy back $950 million in shares in the first quarter of 2025 and $4.5 billion over the year, which would represent about 8% of the company’s market capitalization.
The analysis by UBS comes as investors look to Charter Communications’ future financial performance, with particular interest in how the company will manage its capital expenditures and share buyback program in the face of flat revenue projections and moderate EBITDA growth. For deeper insights into Charter’s financial health and growth prospects, InvestingPro subscribers can access exclusive analysis, including 6 additional ProTips and comprehensive valuation metrics in the detailed Pro Research Report.
In other recent news, Charter Communications reported strong fourth-quarter 2024 results, surpassing earnings expectations with an earnings per share (EPS) of $10.1, compared to the forecasted $9.29. The company’s revenue reached $13.93 billion, slightly above the anticipated $13.88 billion. Citi analysts resumed coverage on Charter, assigning a Buy rating and a price target of $425, citing potential accelerated free cash flow growth starting from 2025. Meanwhile, Bernstein maintained an Outperform rating with a $385 price target, noting Charter’s better-than-expected broadband subscriber loss figures in the fourth quarter.
Charter Communications has also been active in enhancing its service offerings, with Spectrum Mobile and Xfinity Mobile launching a satellite-based messaging service in collaboration with Skylo. This feature is currently available on select Samsung (KS:005930) and Google (NASDAQ:GOOGL) devices, with plans to expand to more devices in the future. Additionally, Spectrum Reach, Charter’s advertising division, introduced the Audience Reach Optimizer (ARO), a new tool designed to improve the precision of advertising campaigns by leveraging proprietary data. This system allows advertisers to optimize media spending and target audiences more effectively.
Looking ahead, Charter plans to continue its network expansion and evolution, projecting capital expenditures of approximately $12 billion for 2025. The company aims to grow its EBITDA in 2025 and expects capital expenditures to decline to under $8 billion by 2028. Charter’s management remains confident in its strategy, focusing on AI-powered customer service tools and expanding its mobile business.
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