Citi cuts Altice USA target to $2.50, keeps buy rating

On Monday, Citi adjusted its outlook on Altice USA (NYSE:ATUS), reducing the stock's price target to $2.50 from the previous $3.00, while reiterating a Buy rating on the shares. The change in valuation follows the company's second-quarter financial results and recent disclosures in its 10-Q filing.

Citi's stance remains positive, emphasizing the potential for Altice USA to restructure its operations and improve its financial performance. The firm also points to opportunities for the company to monetize non-core assets and benefit from strategic advantages due to its geographic reach and the growing interest in combined mobile and broadband services.

The revised price target of $2.50 is based on updated estimates and a shift in valuation methods to encompass forecasts extending into 2025, which includes adjustments for the Discounted Cash Flow (DCF) analysis. Citi's continued endorsement of a Buy rating indicates a belief in the company's prospects despite the lowered target.

Citi acknowledges risks associated with its assessment, primarily that Altice USA's EBITDA might not meet expectations. Such an outcome could increase the company's net debt leverage and consequently diminish equity value for shareholders. This scenario stands as a cautionary note amidst the firm's otherwise optimistic outlook for Altice USA.

In other recent news, Altice USA reported its Q2 2024 results, indicating a mixed performance amid competitive pressures. The telecommunications firm announced revenues of $2.2 billion and an adjusted EBITDA of $867 million, marking year-over-year declines of 3.6% and 5.9%, respectively. Despite these declines, Altice USA saw an increase in fiber and mobile customers, although it faced a net loss of 51,000 broadband subscribers.

The company's capital expenditures were down by 27% year-over-year to $348 million, with a full-year CapEx expected to be under $1.6 billion. Altice USA's debt maturity profile remains stable until 2027, with a weighted average cost of debt at 6.5%.

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