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Investing.com - TD Cowen has reiterated its Buy rating and $9.00 price target on Uniti Group (NASDAQ:UNIT), maintaining it as the firm’s top investment idea in the sector alongside T-Mobile and Equinix (NASDAQ:EQIX). According to InvestingPro data, the stock currently trades at an EV/EBITDA multiple of 7.9x, suggesting potential undervaluation relative to peers.
The fiber infrastructure company reported in-line revenue and EBITDA for the first quarter of 2025 and reaffirmed all major guidance metrics. Despite these solid results and maintaining a strong financial health score of "GOOD" according to InvestingPro, Uniti’s stock fell approximately 10% following the earnings announcement and has remained subdued since. The company offers an attractive dividend yield of nearly 14%, significantly above industry averages.
TD Cowen attributes the stock’s weakness to potential misunderstanding of pro-forma financials, investor uncertainty following the company’s REIT status change, and hesitation ahead of expected dilution when the Windstream transaction closes in July or August.
The firm highlights Uniti’s strong bookings driven by generative AI demand, with strand counts sold to hyperscalers reportedly 30-50 times higher than a few years ago and blended anchor yields approaching 30%. Additionally, Kinetic’s fiber-to-the-home (FTTH) goal has been increased to over 3.5 million homes by 2029, now supported by asset-backed securities capacity.
TD Cowen remains bullish on what it calls "twin engines of commercial and residential fiber super-cycles" and projects over 90% potential upside for Uniti’s stock based on a 7.9x sum-of-the-parts valuation multiple. Analyst consensus shows targets ranging from $3.50 to $9.00, with InvestingPro analysis revealing 10+ additional key insights about Uniti’s valuation and growth prospects available to subscribers.
In other recent news, Uniti Group Inc. announced its first-quarter earnings, which fell short of analyst expectations. The company reported adjusted earnings per share of $0.05, missing the consensus estimate of $0.09, and revenue of $293.9 million, slightly below the projected $296.56 million. Despite the earnings miss, Uniti Group highlighted a 40% increase in consolidated bookings and a decline in capital intensity for its fiber business. In another development, Uniti Group launched a $600 million senior notes offering, with proceeds aimed at partially redeeming existing notes and supporting general corporate purposes. Additionally, shareholders approved the company’s merger with Windstream, expected to close in the third quarter of 2025. Citi analysts reinstated a Neutral rating on Uniti Group stock, citing the merger’s potential to enhance investment capabilities despite existing challenges. Meanwhile, TD Cowen analysts maintained a Buy rating for American Tower (NYSE:AMT), citing strong enterprise demand and positive growth prospects. These recent developments reflect ongoing strategic maneuvers by Uniti Group and American Tower in their respective markets.
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