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Citi Analysts Revisit Their Investment Strategy On Crown Castle, Other Wireless Tower Stocks

Citi Analysts Revisit Their Investment Strategy On Crown Castle, Other Wireless Tower Stocks - Crown Castle International Corporation NYSE:CCI, American Tower Corporation REIT NYSE:AMT

While noting that tower stocks had rallied 9 percent over the past month and 15 percent year-to-date, Citi’s Michael Rollins said in a report that this was the right time to focus on buying the cheaper assets.

Analyst Michael Rollins expects domestic tower site leasing growth to continue to be in the 4-7 percent range over the next 12-months, “as carriers wait for activity to improve from AT&T, an eventual FirstNet deployment, & deployments of other spectrum bands.”

Crown Castle

Rollins downgraded the rating on Crown Castle International Corp CCI 1.37% from Buy to Neutral, while raising the price target from $94 to $109. The stock has gained almost 26 percent y/y, while the dividend yield has declined to 3.5 percent, falling significantly below the average for the meg-cap telcos of 4.3 percent.

Recommended To Buy

The analyst maintained Buy ratings on American Tower Corp AMT 0.92% and SBA Communications Corporation SBAC 0.86%. He raised the price target for American Tower from $121 to $134 and that for SBA Communications from $112 to $132.

The Citi report stated that both companies had “cheaper fundamental valuation metrics, while reinvesting a greater proportion of cash flow into their operations and/or shares.” Their valuations were at a discount of 16 percent, while they faced prospects for improved tower gross profit growth.

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DateFirmActionFromTo
Jul 2016CitigroupDowngradesBuyNeutral
Apr 2016Cowen & CompanyMaintainsOutperform
Feb 2016SunTrust Robinson HumphreyInitiates Coverage onBuy

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