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Investing.com -- Wells Fargo raised its rating on Crown Castle (NYSE:CCI) to Overweight and lifted its price target to $125 from $105 given faster-than-expected progress on cost reduction and an improving outlook for free cash flow. The brokerage called Crown Castle its top pick among tower operators.
Following a stronger Q2, Crown Castle raised its full-year guidance for adjusted funds from operations per share (AFFO/sh) by about 2%, helped by early cost takeout efforts and higher domestic site billings.
Wells Fargo (NYSE:WFC) believes the updated forecast remains conservative and expects further margin improvement as the company closes its fiber and small cell deal.
Crown Castle’s tower margins currently trail peers by 500 to 700 basis points, with selling and administrative costs also running higher.
The analysts see room to close that gap and project mid-70% EBITDA margins longer term. They now estimate AFFO/sh of $5.25 for 2026 and roughly $6 for 2027, about 7% above consensus.
Q2 results showed early signs of progress, including $10 million in added site revenue from carrier activity, $10 million in SG&A savings, and $5 million in higher service margins.
With the Sprint churn largely complete, Wells Fargo expects 4–5% annual organic revenue growth and 6–8% annual AFFO/sh growth through 2028.
The stock trades at a discount to American Tower (NYSE:AMT) on 2026 and 2027 multiples, which Wells Fargo views as unwarranted given Crown Castle’s improving fundamentals and potential for share buybacks once the fiber transaction closes.
It now values the stock at 23x 2026 AFFO, assigning a modest premium to peers based on business mix and growth.