On Tuesday, TD Cowen adjusted its stance on shares of Altice-USA (NYSE: ATUS), reducing the price target to $3.50 from the previous $6.00. Despite this change, the firm continues to recommend a Buy rating on the stock. The decision follows the company's third-quarter 2024 performance, which presented a mix of positive and negative financial indicators.
Altice-USA reported a quarter that showcased strong subscriber growth in its fiber and mobile segments, as well as setting ambitious new near-term (NT) targets. These targets include significant increases in mobile and fiber subscriber additions, a reduction in capital expenditures (capex) for 2025, and an aim to achieve EBITDA margins around 40%. The exact timing for reaching these margins remains unspecified.
The firm's analysis indicates that the new targets set by Altice-USA appear to be within reach, acknowledging the company's noticeable progress in key areas. However, the reduced capex forecast is expected to lead to a slower pace in the rollout of fiber-to-the-home (FTTH) infrastructure.
Moreover, the analyst noted that while the new targets are promising, the lowered earnings before interest, taxes, depreciation, and amortization (EBITDA) highlight that any potential operational turnaround may start from a weaker financial position than previously anticipated.
In conclusion, while TD Cowen has lowered the price target for Altice-USA, the firm maintains a positive outlook on the stock's potential, citing the company's clear progress and achievable goals. The lowered EBITDA does present a challenge, but the firm remains confident in the company's strategic direction.
In other recent news, Altice USA reported key developments in its Q3 2024 Earnings Call. The company highlighted operational improvements and strategic growth in its fiber customer base, with CEO Dennis Mathew emphasizing a focus on enhancing customer experience and operational stability.
Despite a decline in total and residential revenue, Altice USA saw a significant increase in mobile services revenue and maintains a strong liquidity position with no debt maturities until 2027.
The company reported Q3 revenue of $2.2 billion and adjusted EBITDA of $862 million. Altice USA added 47,000 new fiber customers in Q3, reaching a total of 482,000, and grew its mobile services with 36,000 new lines, totaling 420,000. Moreover, the company generated $77 million in free cash flow in Q3.
Altice USA is committed to growing its fiber and mobile subscriber bases, aiming for over 1 million customers in each segment by 2026 and 2027, respectively. The company also anticipates reaching 500,000 fiber customers by year-end 2023.
Despite challenges, the company continues to focus on operational excellence and market strategy evolution, with an aim to continue its progress in the dynamic telecommunications market.
InvestingPro Insights
To complement TD Cowen's analysis, recent data from InvestingPro offers additional perspective on Altice-USA's financial position and market performance. The company's market capitalization stands at $1.67 billion, reflecting its current market valuation.
InvestingPro Tips highlight that Altice-USA has shown a strong return over the last three months, with price data confirming a substantial 50.58% total return in this period. This aligns with the firm's positive outlook on the stock despite the lowered price target. Additionally, analysts predict that the company will be profitable this year, which could support the achievability of Altice-USA's new targets.
The company's revenue for the last twelve months as of Q3 2024 was $9.02 billion, with a gross profit margin of 67.63%. These figures provide context to the operational performance discussed in the article. The EBITDA for the same period was $3.43 billion, with a slight decline of 3.25%, which relates to the analyst's note about the lowered EBITDA starting point for the potential turnaround.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Altice-USA, providing deeper insights into the company's financial health and market position.
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