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Investing.com -- Bernstein downgraded Charter Communications (NASDAQ:CHTR) to Market-Perform from Outperform saying the stock has largely priced in near-term positives after the rally and now offers limited upside.
Charter shares have gained roughly 40% over the past year and 15% year-to-date, outpacing the flat performance of the broader S&P 500.
Bernstein said the rally reflects easing concerns around a potential EBITDA decline in 2025 and optimism around future cash flow gains, but believes the stock now trades near fair value.
The firm raised its price target to $410 from $385 but said it no longer sees a strong enough risk-reward to maintain a bullish stance.
“We still see some upside from here, but not enough to justify a bullish stance - at least not now,” the analysts wrote.
Bernstein noted Charter faces ongoing pressure in its broadband business, having lost subscribers for nine straight quarters.
The losses have been driven in part by competition from fiber and fixed wireless access (FWA), both of which continue to expand.
FWA subscribers are expected to nearly double and reach around 20 million by 2030.
Still, the firm pointed to encouraging signs, including improving mobile revenue, with ARPU now above $30, and stabilizing broadband trends helped by rural expansion and bundled offerings.
Bernstein said Charter’s pending deal with Cox Communications could add scale and cost savings, potentially supporting over $28 billion in EBITDA. However, the deal has not yet closed, and its potential benefits are not included in the firm’s current valuation.
Capex is expected to peak in 2025, with free cash flow set to improve in 2026, supporting Charter’s ongoing leveraged buyback strategy.