Following AT&T’s (T) announcement last night it will give up its bid to buy Deutsche Telekom’s (DTEGY) T-Mobile USA unit, there’s been some rejoicing, as I noted earlier, for the companies that own and operate the cellular towers used by carriers, who all seemed until today to be on the wrong side of industry consolidation.
Stifel Nicolaus’s Ben Lowe takes diverging points of view on American Tower (AMT) and SBA Communications (SBAC), rating the former a Buy and the latter a Hold.
Overall, the long-term, or “secular” expansion of mobile data use, and of Internet traffic, will lead to further investment by carriers in network infrastructure, which should be good for the tower stocks, he thinks.
American Tower “is well positioned to capitalize on the attractive fundamental growth outlook for the tower industry as well as company specific growth initiatives,” he writes, “which include the company�s efforts to enhance its overall growth by investing internationally.”
Lowe’s $72 price target on AMT is a multiple of 17 times enterprise value divided by Ebitda.
SBA, on the other hand, is “an interesting growth story,” he thinks, but the company’s balance sheet is not as flexible given higher leverage, and there’s only “modest potential upside in the stock.”
AMT shares are up $2.59, or almost 5%, at $59.77, while SBAC is up $1.57, or 4%, at $41.14.
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