• American Tower offers a discounted valuation compared to its historical average and has a sustainable dividend.
• The company has positive growth prospects in the telecommunications infrastructure sector, particularly in international markets.
• American Tower’s financial performance has improved, with strong revenue growth and increased profitability, despite a decline in net income due to a goodwill impairment charge.

American Tower (NYSE:AMT) currently offers a discounted valuation compared to its history and has a sustainable dividend, making it an interesting play within the REIT sector.

As I’ve covered in a previous article, American Tower is a good long-term income investment due to strong fundamentals and a sustainable dividend. However, its relatively weak growth prospects have been a drag on its share price performance, and since my previous article its shares are up by ~5%, clearly underperforming the market during the same period, as shown in the next graph.

In this article, I analyze American Tower’s most recent financial performance and update its investment case, to see if it remains an interesting income option or not in the REIT sector.

Financial Overview

American Tower is one of the largest REITs in the world, measured by its market value of about $88 billion. Despite its large size, it still has some positive growth prospects over the medium to long term, as the REIT is focused on telecommunications infrastructure, which is expected to gradually expand due to increased data usage over the next few years.

This is a supportive backdrop for American Tower both in developed and emerging markets, and the company is well positioned to benefit from this structural trend, given that it has operations across the globe. In the last quarter, American Tower was able report strong revenue growth across the group, even though, not surprisingly, the company is reporting higher revenue growth in international markets, namely in Africa and Europe, showing that demand for infrastructure assets remains strong across the world.

Property revenue in Q3 2023 amounted to nearly $2.8 billion, up by 7% YoY, even though growth was impacted negatively by forex during this period.

Due to its business model that has relatively low operating expenses, given that American Tower usually owns the real estate and the tower structure, while its tenants usually own the remaining tower equipment, American Tower has been able to report a positive operating leverage. This means that higher revenues don’t necessarily lead to higher operating expenses, thus American Tower increasing top-line has led to higher margins over the past few quarters. This happens because it has long-term leases with contractual rent escalators, high renewal rates and low vacancy, plus relatively low maintenance expenditures.

Therefore, during a period of rising inflation, its business benefits from these types of contracts, if the company can maintain good cost control. In the last quarter, this was visible on its property gross margin, which increased by 10.4% YoY to nearly $2 billion (gross margin of 71%), a higher growth rate than compared property revenue, showing its positive operating leverage.

Beyond the fact of having relatively sticky operating expenses, its operations also have positive operating leverage from a higher customer base, given that when it establishes a property and a tower, there are limited additional costs of adding additional tenants, thus its incremental revenue from new tenants flow almost directly into its bottom-line.

Taking this background into consideration, it’s not surprising to see that American Tower’s profitability has improved significantly in the past few quarters, with EBTDA and Adjusted Funds From Operations (AFFO) both increasing at a higher rate than revenues in Q3, as shown in the next graph.

Indeed, its EBITDA margin has increased by 290 basis points over the past year to 64.4%, which is a very good outcome during a period of significant macroeconomic uncertainty, showing that its business has a recurring profile and benefits from higher demand for data usage, a long-term trend that is not expected to change in the foreseeable future.

On the other hand, American Tower’s reported net income declined by 30% YoY to $587 million in the quarter, impacted by a goodwill impairment charge of $322 million related to its India operations. This happened because American Tower put this business for sale and third-party fair values received for the business were lower than its accounting value, which led to a revaluation of the goodwill in its balance sheet. In January 2024, American Tower agreed to sell its India operations to Brookfield for $2.5 billion, exiting the country when the deal is completed.

While India is an emerging market and growth prospects are good for the telecommunications industry in the country, American Tower was heavily reliant on one tenant, namely Vodafone’s (VOD) local unit, while Brookfield is already present in the country and its main tenant is Reliance Industries, thus it may have better operating prospects than American Tower in India.

American Tower is expected to use the proceeds of this sale mainly for balance sheet deleveraging, which seems to be a sensible move and should lead to a more sustainable dividend in the future.

While its acquisition of CoreSite Realty back in 2021 led to an increase in its financial leverage, American Tower’s strategy has been focused since then on balance sheet deleveraging and the recent deal related to its India operations is another step to improve its leverage position. Indeed, its net debt-to-EBITDA ratio was 6.1x at the end of 2021, while this has decreased to 5x at the end of Q3 2023, a much more acceptable position.

Moreover, its liquidity and debt profile have improved over the past few quarters, as the company was able to raise new bonds, increasing the weight of fixed-rate debt and the average maturity of its outstanding debt.

This shows that despite a tough environment for REITs due to the rising interest rate environment, American Tower has been able to maintain good access to capital markets, which is a supportive factor for a sustainable business model over the economic cycle.

While its leverage ratio has declined gradually over the past couple of years, it’s still at the top of its desired range of 3-5x, thus American Tower is still in a deleveraging process and therefore is not likely to enter into large M&A deals or increase aggressively its shareholder remuneration policy.

Indeed, while American Tower expects AFFO to be about $4.57 billion in 2023, its capital deployment plan is to allocate this amount toward dividends, capital expenditures, and small M&A operations, thus it’s not expected to retain much cash for deleveraging. This means that its financial leverage ratio should come down mainly from higher EBITDA, while its cash flow generation should not be used to reduce debt in the short term.

Regarding its quarterly dividend, American Tower has increased it gradually over the past few quarters, to a current level of $1.70 per share, or $6.80 per share annually, reflecting annual dividend growth of about 10%. However, for 2024 its guidance is for a flat dividend, thus further increases in the coming quarters are not expected.

This means that, at its current share price, American Tower offers a forward dividend yield of about 3.56%, which is an acceptable level, but much lower than other REITs. Indeed, even compared to its closest peer Crown Castle (CCI) it offers a lower yield, thus American Tower’s income appeal is not fantastic even though its dividend is sustainable and should maintain a growing path over the long term.

While for 2024 its dividend should remain more or less unchanged compared to the mid-point of the previous year, according to analysts’ estimates, its dividend is expected to grow to $8.16 per share by 2026, showing that American Tower’s dividend growth prospects are relatively good over the next few years.

Conclusion

American Tower is a good income investment due to its strong fundamentals and safe dividend, even though its dividend yield is not that high. Nevertheless, its valuation is also quite attractive, given that it’s currently trading at 18.5x FFO, at a significant discount to its own historical average of nearly 25x over the past five years, making it also interesting from a value perspective for long-term investors.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post American Tower: An Undervalued Income Play appeared first on Up2info.com.

• To generate significant cash flows, American Tower needs to squeeze more money out of its Tower Assets, but the trend shows that the opposite is happening.
• Also, mobile data growth remains a key factor driving the need for digital infrastructure, but the amount being spent by customers, in this case wireless carriers, should also be considered.
• From both these two perspectives, it is not worthwhile to invest.
• However, both cost control and debt reduction are positives at times of uncertainty.
• Thus, I have a hold position for AMT which pays above 3.5% dividend yields, but, as a rate-sensitive stock, it can suffer from volatility in case Mr. Powell sounds too hawkish.

REITs or Real Estate Investment Trusts have historically been resilient in navigating periods of uncertainty as they tend to generate steady cash flows. Also, according to some researchers, it is the S&P real estate sector that has proved to be the real winner compared to other market averages since October last year with American Tower (NYSE:AMT) closely following as shown in the orange chart below.

Given such a backdrop, one could be tempted to invest in this specialized REIT which pays dividend yields of above 3.5% and also provides exposure to the digital transformation trend now being given further impetus by AI. However, this thesis thinks otherwise and for this purpose, I will focus on the stock’s sensitivity to interest rates. It is also important to assess how its customers, or telcos providing wireless services are spending.

First, I check whether AMT can continue to generate a sustained level of cash.

Squeezing less Money out of its Tower Assets

For cash to be generated from operations sustainably, revenues should maintain their growth trajectory in the first place. Now, this is indeed been historically the case with AMT whose revenue has been growing steadily throughout the years with double digits (or 14.9%) recorded for fiscal year 2022. However, analysts have a consensus estimate of only 3.6% for fiscal 2023 which constitutes a significant drop.

On the other hand, the company boasts superior profitability scores relative to the median for the real estate sector, especially for cash generated from operations. However, there is one important sustainability-determining metric that is missing and this is the capex-to-sales ratio which is a measure of the capital spent for every dollar of sales generated.

To make up for this discrepancy, I dug into the cash flow statement to extract the Net Sale/Acquisition of asset metric which is negative thereby showing that more assets have been acquired than disposed of. Here, I am talking about the cell towers it acquires before leasing them to telcos. For this matter, 92% of its revenues came from tower assets compared to only 8% from data centers during the third quarter of fiscal 2023 (Q3). Dividing the cash flow from operations by this metric, I obtained the Cash Flow from Ops/Asset Acquired ratio, and plotted the values from 2014 to 2022 as shown by the orange chart below.

This shows that from a peak of around $4 of cash generated for each dollar spent on assets in 2018, only $2 was obtained in 2022, with the downturn starting in 2021 indicating that there has been a pronounced deterioration in the cash earned from cell towers on a relative basis.

The same downtrend is shown by the Revenues to Assets Acquired ratio in the blue chart above, showing that the return from investment has gone down. Now, investing more money while seeing lower returns can only result in higher debt of $46.8 billion, especially given the REIT’s commitment to maintaining dividend payments at the $3 billion level.

Divesting as Telcos Spend Less

Looking into the rear mirror, there was again a deterioration in returns in 2003 as per the chart below, but both debt and interest rates were much lower then than currently. Thus, it is not surprising that AMT is performing capital recycling or selling underperforming assets to reduce leverage.

In line with the above strategy and focusing on organic growth, it has divested its fiber business in Mexico, and tower business in Poland, followed by the sale of its 100% equity interests in ATC India amounting to $2.5 billion to Data Infrastructure Trust, an affiliate of Brookfield Asset Management (BAM). Also, that country could account for about 11% of the company’s overall property sales of $2.79 billion at the end of Q3. Now, since the deal could be closed in H2-2024, this means that about $254 million (2,7900 x 0.11) of sales have to be subtracted from the topline of fiscal 2024 when only 1.2% of topline growth is anticipated by analysts as shown below.

Looking further into the reason for divestment away from India where mobile data usage is exploding shows that things can prove more complicated when competition is factored in together with customers’ spending power. Here, the problem is that AMT’s largest customer, Vodafone Idea which is facing financial constraints failed to honor some leasing payments resulting in AMT’s bearing impairment charges, all in an environment of strong competition from Indus Towers and Summit Digitel, two big owners of cell towers.

Looking West, while the U.S. and Canadian markets which accounted for 47% of AMT’s revenues in Q3 (as calculated from the SEC filing below) do not suffer from the same problems as the Indian market, it shows one cannot take for granted that towerCos can just rely on data usage to keep on growing rapidly through the addition of more tenants and equipment on their towers.

In this respect, even if mobile data usage growth of 20% to 30% range is expected in the U.S., it will ultimately depend on what wireless operators spend in terms of capital. Thus, after investing heavily to acquire spectrum frequencies, place radio antennae atop cell towers since 2018, and upgrade their networks from 4G to 5G, the net capital spending has seen a net downtrend since 2021 considering what the three nationwide MNOs (mobile network operators) spend as charted below.

Looking forward, AMT’s CEO talking during a conference on December 4, expects carrier Capex to decrease to $35 billion annually from around $42 billion. Still, analysts from Wells Fargo (WFC) were even more pessimistic in September 2023 as per an article in Lightreading, and instead forecast a trough in carrier spending to about $27 million, in 2024.

Therefore, amid such a backdrop, it is not advisable to invest, but there is worse.

AMT’s Rate Sensitivity and Exposure to AI

Coming back to the introductory chart, a large part of REITs’ upside was after the Federal Reserve opted to leave interest rates unchanged as of September last year. Subsequently, the U.S. Central Bank again adopted a neutral stance in the October FOMC meeting, while at the same time, except for some monthly variations, the inflation rate has been on a downtrend since mid-2022. Thus, with progress seen in the fight against inflation, many market participants started pricing rate cuts with up to 75% expecting rate cuts in March 2024 earlier this year.

Now with its above-3.5% dividend yield as pictured below, AMT remains a rate-sensitive stock.

Now, when rates are cut this means that government bonds and other risk-free investments will pay lower yields, which automatically favors dividend-paying REITs as alternatives for income-seeking investors. This is the reason AMT and other REITs went up, but their performance has plateaued before seeing a decline in January. This was due to the Fed’s Chairman sounding somewhat hawkish during the December 12-13 FOMC meeting when he said that “it is far too early to declare victory” on inflation. In the January meeting a few days back, he reiterated this sentiment by saying that “inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain”.

As a result, only 40% of economists now believe that there will be rate cuts in March, which means that in case the Fed does not turn dovish in about six weeks during the next FOMC meeting, market conditions could prove volatile for REITs in general, but, the outcome could even be worse for AMT.

In this case, as part of capital recycling, the company is disposing of assets which is good for the balance sheet and its objective to achieve a leverage ratio of 5%. However, if it wants to acquire assets to boost growth, AMT may disburse more money than it plans due to higher borrowing costs in case interest rates remain higher for longer. Therefore, in the eventuality of an acquisition that impacts its leverage, the stock will suffer.

In this respect, gone are the days when AMT’s share price was somewhat correlated with the tech-heavy Invesco QQQ Trust ETF (NASDAQ:QQQ) or cloud hyperscaler Microsoft (NASDAQ:MSFT) as shown in the chart below. This was more precisely after December 2021 when it acquired CoreSite to take advantage of opportunities in edge computing (or processing of data away from metro areas) as I had elaborated in a thesis in July 2022.

Even with the additional sales opportunities, I had a Neutral position as the stock was already richly valued at that time, and, it is the same today with the company rated D- in terms of valuations. Along the same lines, following the $2.5 billion asset sales, the price-to-FFO will not come down as it only includes cash generated from operations. On the other hand, the stock could come down from the $190 level to the $175-$180 support level due to its rate sensitiveness in case Mr. Powell does not change his hawkish stance.

Still, I do not have a Sell rating as during times of uncertainty, cost control measures also matter. To this end, the mid-point of the capital expenditure of $1.7 billion for 2023 is less than the year before and dividend payments also have not increased (as they are being kept flat year-over-year). Furthermore, AMT’s trailing interest coverage ratio of 2.65% is well above the median for the sector and progress is being made on leverage. For this matter, considering that $2.5 billion (tower sales in India) makes up 5.3% of the total debt of $46.8 billion displayed by the balance sheet at the end of Q3, the debt/total capital ratio should come down to about 75.3% from 80.65% currently which is another positive.

Finally, with its data center business seeing a 9% YoY growth in Q3, AMT could see more AI-led colocation revenues, especially in the North American market this year, while not forgetting edge computing opportunities as more people consume intelligent applications through the luxury of their mobile phones. In this case, for those wishing to position themselves on the stock, it is better to wait for updated guidance especially as to the growth strategy when financial results for the fourth quarter are announced around February 27.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post American Tower: Telco Spending Issue And Rate-Sensitivity Risks appeared first on Up2info.com.

• Increased mobile penetration and data demand to drive growth.
• Dip in earnings per share is short term; 2024 rebound is expected.
• Investors need to watch debt levels as interest expenses are squeezing margins.
• American Tower is priced for a 7% stock price CAGR based on DCF valuation.

Investment Thesis

American Tower Corporation (NYSE:AMT) is well positioned to experience growth, taking advantage of the increasing mobile penetration and data demand. The expansion of voice and data networks, along with the growing adoption of devices (excluding IoT), indicates a demand for AMT’s infrastructure services worldwide. From my perspective, AMT has consistently shown revenue growth despite some fluctuations in earnings per share due to factors only effecting the business in the short term. Although it’s important to monitor the debt situation, AMT’s stable revenue should enable effective management of it. Based on valuations, it seems reasonable to expect a projected return of 7% making it hold for investors despite the company’s fundamentals and growing demand.

Company Overview

American Tower Corporation is a real estate investment trust (REIT) that specializes in owning and operating infrastructure, for broadcast communications. Their main focus is leasing out space on their network of cell towers and rooftop sites as well as other communication structures to tenants, including wireless carriers and broadcasters. The primary source of revenue for American Tower comes from these leasing agreements, which provide a recurring income stream for the business.

With the increasing demand for connectivity with the expansion of 5G networks American Towers infrastructure becomes even more valuable. Moreover the company has a presence globally ensuring diversification of revenue streams.

In the telecommunications infrastructure sector notable competitors include Crown Castle (CCI) and SBA Communications Corporation (SBAC). These companies also like to lease their own communication infrastructure assets in a similar way.

Long-Term Demand Drivers

American Tower Corporation should experience sustained growth, supported by what I expect for be a steady increase in total mobile usage, higher revenues from carriers and an overall higher demand for mobile data. These factors are expected to drive long term growth for the business. As we can see below, factors including the expansion of the voice networks, the establishment of 4G/5G networks pushed by higher global data usage and spectrum auctions (i.e. antennas) all have a positive impact on revenue streams which lead to new and renewed leases.

Further supporting AMT’s future demand is the projected growth in mobile device penetration in the United States. The total number of connected devices is expected to increase at a compound annual growth rate of 7% from 2023 to 2028 for overall devices. Non IoT devices, such as smartphones and tablets are projected to grow at a CAGR of 13% indicating a strong expansion in traditional mobile devices.

The next image below offers a perspective on the growth of mobile data usage specifically focusing on smartphone data usage. It is forecasted that there will be an increase in smartphone data usage in the U.S. from 59.4 GB in 2023 to 68.7 GB by 2028, with an impressive CAGR of 18.1%. We can also see Latin American countries such as Mexico and Brazil, expected to grow mobile data usage at a CAGR of 24% over the next five years. The huge market of India is also expecting to see growth of about 14% annually. The growth across multiple regions, clearly show that there should be continued growing demand for AMT’s infrastructure.

These pieces of information create a story that highlights how AMT is in a position to take advantage of the current and future need for mobile connectivity. As more people adopt devices and use data it becomes undeniable that we need strong, widespread and efficient wireless infrastructure. AMT’s business model, which involves leasing space on their network of towers is well suited to benefit from these trends. With the increasing reliance on networks for business communication there should be demand for communication towers for plenty of years to come.

Financial Analysis

From my perspective AMT has demonstrated solid performance from 2018 to 2023. The firm’s top line increased from $6,663.90 million in 2018 to $11,062.50 million over the last twelve months, this is a CAGR of 9.7%. From my perspective, this goes to show that the demand for telecommunication towers are rising steadily over the trailing five years. Interestingly we saw a saw weakening in earnings per share which decreased from $2.67 in 2018 to $1.46 in the LTM. It should be noted that in 2022, EPS was $3.82. This decrease in EPS that we saw in the last year will be short-term in my opinion as it was driven by short-term factors such as an impairment charge related to Vodafone Idea in India not being able to meet their financial obligations as well as higher interest rates leading to a higher interest expense. As the impairment charge is put to bed and as interest rates will likely start to fall this year, I see AMT’s EPS getting back to growth this year.

In terms of diluted shares outstanding, it has gone from 431.69 million in 2018 to 467.16 million in the past twelve months. This shows owners of the stock have been slightly diluted, but this is nothing to be concerned about in my opinion. American Tower has grown shareholders’ equity per share has gone backwards over the last 5 years, going from $14.46 in 2018 to $9.70 in the last twelve month. On paper this looks bad, but we need to realize that this is mostly due to an increased debt load, which will consequently lead to stronger book value in the future has the tenants of the towers help the business pay down the debt. When considering free cash flow, the company has compounded at a rate of 5.4%, increasing from $2,122.00 million in 2018 to $2,833.80 million in the last twelve month. This demonstrates that the company is producing more cash after factoring in capital expenditures than it used to five years ago. I think growth here will accelerate into the future as most of the capital expenditure currently is growth capex, therefore if the business was to pull back on reinvestment, the actual free cash flow would be significantly higher.

It is my stance that ROIC is a good measure in determining whether a business is efficient in reinvesting company profits. Through the previous 5 years, American Tower’s five-year median ROIC was 7.5%, hence this is an indication that the management team have below average ability to reinvest funds back into the business for future growth.

Regarding the balance sheet the recent quarterly report reveals cash and cash equivalents amounting to $2,118.90 million. The overall debt that the business is liable for is $35,421.30 million. Since the cash on the balance sheet covers only 6 percent of the debt load and that overall debt will take 13 years of free cash flow to pay off, this is something investors should keep an eye on. American Tower’s current ratio stands at 0.56, signaling that the company may require refinancing to cover the current liabilities over the next 12 months. Overall, I believe the businesses debt level should be watched by investors to ensure the debt loading on the company does not worsen, though for the time being the revenue of this business is stable and recurring so the debt is currently not a burning fire.

Valuation

As of Q3 2023, AMT’s current TTM cash flow per share stands at $6.07. Considering the long-term growth opportunities discussed in this article, I anticipate a growth rate of 18% for AMT’s cash flow per share over the five years. Taking this growth into consideration it can be projected that AMT’s cash flow per share, by Q3 2028 would amount to $13.88.

Based on an exit multiple of 24 which is based on where AMT has traded at on a free cash flow basis over the past five years, it is estimated that the stock’s price target, in five years would reach $268.89. Consequently, if you decide to invest in AMT at its share price of $193.51 you can expect a Compound Annual Growth Rate of 7% over the five years according to these calculations. Since I like to aim for annual returns of 15% or higher, I recommend holding this stock for now.

Conclusion

The future prospects of American Tower appear promising as there is an expected increase in mobile penetration as well as overall data usage, which will likely drive long term growth. The expansion of voice and 4G/5G networks along with spectrum auctions is set to boost revenues from leases well as lease renewals. With the projected rise in mobile device adoption in the United States for IoT devices at a compound annual growth rate (CAGR) of 13% it indicates a thriving market for AMT’s infrastructure. Additionally there is growth in smartphone data usage in the U.S. well as high CAGRs in countries like Mexico, Brazil and India showing a global surge in demand.

After conducting analysis, it is evident that AMT’s top line revenue has shown a CAGR of 9.7% from 2018 to 2023. However there has been a recent decline in earnings per share due to short term factors. Despite increased debt load caution should be exercised regarding the level of debt. Unfortunately for AMT, they have stable and recurring revenue streams suggesting that the company should be able to manage its debt. Based on my valuation, I would recommend AMT stock as a hold at the moment. Based on current valuations, the stock is too expensive for a buy as it is only projected to deliver a 7% return currently despite bright fundamentals.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post American Tower: Mobile Trends Fueling Expansion But Not A Buy Yet appeared first on Up2info.com.

• American Tower Corporation is the second largest publicly traded REIT and has outperformed the S&P 500 with a 23.1% increase in share price since last year.
• The company reported strong revenue growth, particularly in its Asia Pacific operations, but net profits fell due to higher interest expenses and impairments.
• Management has announced the sale of its struggling business in India for up to $2.5 billion, which will be used to further reduce debt.

As far as real estate investment trusts, or REITs, go, you don’t get much larger than American Tower Corporation (NYSE:AMT), currently the second largest publicly traded REIT on the planet. In the past, I have written favorably about the company. The last article that I published dedicated to it was published in August of last year. In that article, I compared the company to rival Crown Castle (CCI), ultimately concluding that, while American Tower certain advantages and a better, in summer specs, operational history of hand its rival, Crown Castle made for the better prospect. In a more general article that I recently published, where I was covering three niche REITs, I reiterated that statement.

But just because I view one particular prospect is better than another does not mean that the second-choice candidate is a bad opportunity. Far from it. In my article from August of last year, I ended up rating American Tower a ‘buy’ to reflect my view that the stock should outperform the broader market for the foreseeable future. And sure enough, that is exactly what came to pass. Shares have seen upside of 23.1% since then, a return that dwarfs the 5.9% rise seen by the S&P 500 over the same window of time. Given this nice increase in price, as well as some other developments that have occurred since then, I figured it would be a good time to update my thesis. Truth be told, I would make the case that while shares have risen materially, American Tower still offers enough potential to warrant a ‘buy’ rating at this time.

Performance keeps chugging along

Since my last article dedicated to American Tower, we have seen additional data come out. That data includes results for the third quarter of the company’s 2023 fiscal year. For the most part, that quarter was a strong showing for the company. Revenue, for instance, came in at $2.82 billion. That represents an increase of 5.5% over the $2.67 billion generated one year earlier. Some of the company’s strongest growth came from its Asia Pacific operations, with revenue spiking 21.3% from $249.2 million to $302.3 million. That increase was driven mostly by higher pass-through revenue and other revenue that was driven by a decrease in revenue reserves because of reserves that were taken the prior year. In the US and Canada, meanwhile, revenue grew a much more modest 5.2%. But that $65.3 million increase it resulted in is rather significant. And most of that was driven by a $59.8 million rise in tenant billings that management attributed largely to the leasing of additional space at its sites.

With a rise in revenue, you would expect to see an improvement in earnings. But there were multiple issues that the company contended with that prevented this from being the case. For starters, higher interest rates led to interest expense rising from $294 million last year to $359.2 million this year. The company also booked a $322 million impairment associated with its operations in India. And lastly, in the third quarter of the 2022 fiscal year, the company had “other income” of $478.5 million. This year, that figure was $297.8 million. Most of the “other income” generated during these windows of time was attributed to foreign currency gains that the company benefited from. As a result of all of this, as well as other factors, net profits fell from $839.7 million to $586.9 million.

Of course, there are other profitability metrics that investors should be paying attention to. And for the most part, these came in strong. Operating cash flow is one example. It jumped from $932.3 million to $1.30 billion. If we adjust for changes in working capital, the rise was only slightly smaller from $965.1 million to $1.28 billion. The only weakness was when it came to FFO, or funds from operations. This metric managed to drop from $1.62 billion to $1.54 billion. But on an adjusted basis, it increased from $1.10 billion to $1.21 billion. And lastly, there was EBITDA. It grew from $1.64 billion in the third quarter of 2022 to $1.81 billion the same time of the 2023 fiscal year. As you can see in the chart above, results for the first nine months of 2023 relative to the same time of 2022 show that this is not a trend. All of the same metrics posted the same trajectories year over year.

Management has not come out with a firm date regarding fourth quarter earnings. We do know that prior guidance provided by management calls for net profits for 2023 in its entirety of between $1.76 billion and $1.82 billion. Adjusted FFO is believed to be between $4.54 billion and $4.60 billion, while EBITDA is likely to be between $7.01 billion and $7.09 billion. Assuming all of these come to fruition, we should see FFO of around $5.34 billion and adjusted operating cash flow of roughly $5.64 billion.

Using these figures, I was able to value the company as shown in the chart above. For a high quality company with generally stable cash flows, the stock is not cheap, but I wouldn’t call it expensive either. Sometimes, you have to pay for quality. And that is what a firm like American Tower brings to the table. You can also see that American Tower is not the most expensive of the group either. In the table below, you can see how shares are priced compared to Crown Castle and SBA Communications (SBAC).

Click to enlarge

Outside evaluation, there are some other things that we should take into consideration. First and foremost is that management has been doing a very fine job of reducing leverage. At the end of 2021, for instance, the company had net debt of $40.91 billion. But for that year, EBITDA was only $5.98 billion. That translated to a net leverage ratio of 6.84. By 2022, a $4.38 billion reduction in net debt and an increase in EBITDA to $6.64 billion brought the net leverage ratio down to 5.50. And assuming that management has not decreased debt any further for the fourth quarter, the net leverage ratio for 2023 should end up being around 5.16.

For a company that has forecasted around $1.65 billion and $1.76 billion toward capital expenditures for 2023, with most of that being focused on growth initiatives, while simultaneously allocating $2.19 billion toward common stock distributions in the first nine months of 2023, this kind of improvement in net leverage is impressive.

But this brings us to another development, which was just announced on January 4th. As I mentioned earlier in this article, the firm took a $322 million impairment on its operations in India. For some time now, American Tower has been struggling with that business. In fact, in its third quarter earnings release, management made clear that they were reviewing strategic alternatives, including taking indications of interest from other parties, that may result in a sale of those assets. Well, on January 4th, the company announced that it was selling off its business in India in exchange for up to $2.5 billion if we assume that current exchange rates remain unchanged.

The $2.5 billion figure is based on $2 billion at closing, with a ticking fee that started accruing from October 1st of 2023. If we assume that management gets the full $2.5 billion, then that will translate to about seven times the annual EBITDA of $355 million associated with those assets. That in and of itself is fairly awful. The good news is that management intends to use the proceeds to reduce debt even further. More likely than not, the firm will allocate at least some of this toward paying down its debt in India. It has one term loan there in the amount of $120.7 million. But my hope is that whatever decision management makes will involve a reduction of some of its higher rate debt. Allocating $2.5 billion toward debt that has a weighted average interest rate of, say, 5.5%, would save the company $137.5 million in interest expense annually. That would improve the EV to EBITDA multiple of the transaction slightly to 11.5. But of course, we will have to wait and see what all transpires.

Takeaway

At this time, I believe that American Tower is a solid prospect for long-term investors who don’t mind paying a bit of a premium for a high-quality business. Management continues to do well to grow the firm, but they are mindful to sell off assets when they believe it appropriate. In the long run, I fully expect that the company will go on to create significant value for shareholders. And because of that, I have no problem keeping it rated a soft “buy” at this time.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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• American Tower’s share price has soared 40% off its 52-week low in recent months.
• The company’s total revenue and AFFO per share climbed higher in the third quarter.
• American Tower holds a BBB- credit rating from S&P on a stable outlook.
• Shares of the communications infrastructure REIT could be trading at a 20%+ discount to fair value.
• American Tower could have what it takes to triple the S&P through 2025 and over the coming 10 years.

In the fast and furious world of the stock market, it can be difficult to keep up. Fundamentals rarely receive the entirety of the focus that they deserve from markets over the short term. When facts fall out of focus, emotions take center stage and narratives begin to form. Thus, how the market can seemingly swing from fear to greed or vice versa overnight.

I don’t have a crystal ball to predict market movements in the near term. That’s precisely why I prefer to focus on buying great businesses and tuning the noise out.

Up 40% from its 52-week low set last October, American Tower (NYSE:AMT), is one such business that I own in my portfolio. Despite this massive pop in the share price, I believe the company remains compelling enough to be a buy. For the first time since May 2021, I will reexamine American Tower’s fundamentals and valuation to explain why.

American Tower’s 3.1% dividend yield clocks in at twice as much as the 1.5% yield of the S&P 500 index (SP500). Yet, this dividend appears to be rather sustainable.

The company’s 57% AFFO payout ratio comes in well below the 90% AFFO payout ratio that rating agencies prefer from REITs. This compensates for an 83% debt-to-capital ratio, which is somewhat elevated versus the 60% debt-to-capital ratio that rating agencies want to see from REITs. That’s why S&P rates American Tower’s debt a BBB- on a stable outlook. This implies the risk of the REIT defaulting on debt over the next 30 years is 11%.

Even after American Tower’s sharp rally in the last two months and change, shares look to remain attractively valued. Based on its historical dividend yield and P/AFFO ratio, shares of the REIT could be worth $288 a piece. Relative to the $215 share price, this suggests shares are trading 25% below fair value.

If American Tower matches the analyst growth consensus and returns to fair value, here are what total returns could look like in the next 10 years:

• 3.1% yield + 11.9% FactSet Research annual growth consensus + 2.8% annual valuation multiple expansion = 17.8% annual total return potential or a 415% 10-year cumulative total return versus the 8.6% annual total return potential of the S&P or a 128% 10-year cumulative total return

A Third Quarter That Outperformed Expectations

American Tower’s results for the third quarter ended September 30 were an all-around display of strength. The company’s total revenue edged 5.5% higher over the year-ago period to $2.8 billion. For perspective, that surpassed the analyst consensus by $60 million.

This healthy topline growth rate was fueled by 7% total property revenue growth during the third quarter. According to CFO Rod Smith’s opening remarks during the Q3 2023 earnings call, American Tower’s organic tenant billings growth was over 6% in the tower business. The 9% organic net revenue growth within the data center business also contributed to the company’s overall growth in the quarter.

Geographically, international organic tenant billings growth of 7.9% led the way for the company (slide 5 of 33 of American Tower’s Q3 2023 Earnings Presentation). This was led by 12.8% growth in Africa and 8.2% growth in Europe. That made up for the 5.3% growth rate in the U.S. and Canada (around 6.5% excluding Sprint churn).

American Tower’s AFFO per share surged 9.3% higher year-over-year to $2.58 for the third quarter. That exceeded the analyst consensus by $0.07. Aside from the higher revenue base, this was driven by a 150 basis point expansion in AFFO margin to 42.8% during the quarter.

Moving to the balance sheet, American Tower continued to improve its financial health. The company’s net leverage ratio has dipped from 5.4 heading into 2023 to 5 as of September 30, 2023. American Tower has also boosted its liquidity during that time from $7.1 billion to $9.7 billion. Lastly, the company has further hedged against floating rate debt: American Tower’s share of fixed rate debt has increased from 77.5% as of December 31, 2022, to 89.1% as of September 30, 2023 (slide 11 of 33 of American Tower’s Q3 2023 Earnings Presentation).

2024 Will Be A Temporary Pause In Dividend Growth

American Tower has been an exceptional dividend grower: In just the past five years, the company’s annualized dividends per share have compounded by nearly 105% to $6.45 in 2023. Management has made it clear that it will be delivering little to no dividend growth in 2024, however.

On its face, this may seem discouraging. But this development isn’t because management is deprioritizing shareholders. On the contrary, American Tower is simply prioritizing shareholders differently. The company believes that it can best deliver value to shareholders in 2024 by focusing even more on reducing its leverage below 5 times per, CEO Tom Bartlett. But beyond that point, American Tower seems committed to returning to strong dividend growth.

Risks To Consider

American Tower is a high-quality REIT, but it still has pertinent risks that are worth considering.

First, the company’s annualized base rents are concentrated among relatively few customers. This concentration risk could become a problem if customers were to experience financial difficulties. Additionally, industry consolidation as of late like the T-Mobile (TMUS) and Sprint merger could lead to increased churn. That could weigh on American Tower’s growth prospects.

The company’s extensive international presence also leaves it vulnerable to regulatory risks. Complying with differing regulations in various markets requires dedicating substantial resources to compliance. Any substantive legislation in major markets could force the company to boost compliance spending. That could pressure American Tower’s growth as well.

Unfavorable foreign currency translation is another possible risk stemming from its international operations. However, foreign currency translation tends to even out over time because it swings both ways.

Summary: A Top-Notch REIT To Own

For a stock that has soared lately, American Tower isn’t as expensive as one would expect. Shares are trading at a P/AFFO ratio of 22.3, which is below the normal P/AFFO ratio of 23.1 per FAST Graphs. Assuming American Tower returns to that multiple and respectively grows 11% and 10% in 2024 and 2025, it could deliver 42% cumulative total returns through 2025. Compared to the current consensus of 13% total returns through 2025 for the SPDR S&P 500 ETF Trust (SPY), this would be enough to 3X the broader market. American Tower’s vigorous total return potential is what has led me to reiterate my buy rating now.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post American Tower: There’s Still Time To Buy This Wonderful REIT appeared first on Up2info.com.

Get ahead of the market by subscribing to Seeking Alpha’s Stocks to Watch, a preview of key events scheduled for the coming week. The newsletter keeps you informed of the biggest stories set to make headlines, including upcoming IPOs, investor days, earnings reports and conference presentations.

Stocks to Watch subscribers can also tune in on Sundays for a curated podcast that’s available on Seeking Alpha, Apple Podcasts, Stitcher and Spotify.

Investors will be focused on the last Federal Reserve meeting of the year next week. While the FOMC is expected to hold rates steady, the tone from Jerome Powell and gang will still be of high interest to market watchers. As it stands now, the Fed’s favored inflation gauge, core PCE inflation, looks on track to end the year comfortably below the central bank’s forecast and not too far off the Fed’s 2% target. Outside of the Fed meeting, the economic calendar also includes the consumer price index and producer price index reports, as well as updates on retail sales and industrial production. Meanwhile, the earnings calendar finally slows down, with reports from Oracle (ORCL), Costco (COST), and Darden Restaurants (DRI) standing out. Big corporate events during the week will include the 65th American Society of Hematology conference taking place in San Diego, California, Chewy’s (NYSE:CHWY) first-ever investor day event, and AI-related reveals from Intel (INTC).

Earnings spotlight: Monday, December 11 – Casey’s General Stores (CASY) and Oracle (ORCL).

Earnings spotlight: Tuesday, December 12 – Johnson Controls International (JCI).

Earnings spotlight: Wednesday, December 13 – Adobe (ADBE) and ABM Industries (NYSE:ABM).

Earnings spotlight: Thursday, December 14 – Costco (COST), Jabil (JBL) and Lennar (LEN).

Earnings spotlight: Friday, December 15 – Darden Restaurants (DRI).

Volatility watch: Crypto-related names Coinbase Global (COIN), MicroStrategy (MSTR), Marathon Digital (MARA), CleanSpark (CLSK), Hut 8 (HUT), TeraWulf (WULF), and Riot Platforms (RIOT) are still being watched for short squeeze potential. Options trading volume rose on GameStop (GME) amid buzz about the board’s decision to allow management to make stock buys of other companies. The most overbought stocks per their 14-day relative strength index are Altimmune (ALT), Sera Prognostics (SERA), and Snap (SNAP). The most oversold stocks per their 14-day Relative Strength Index are reAlpha Tech (AIRE), Ventyx Biosciences (VTYX), and R&Q Insurance Holdings Ltd. (OTCQX:RQIHF).

Dividend watch: Companies projected to boost their quarterly dividend payouts include ABM Industries (ABM) to $0.24 from $0.22, WD-40 (WDFC) to $0.89 from $0.83, American Tower (NYSE:AMT) to $1.70 from $1.62, and WEC Energy (NYSE:WEC) 40.83 to from $0.78. See Seeking Alpha’s list of Quick Dividend Stock Picks.

IPO watch: Inno Holdings (INHD) is the only IPO expected to launch next week. The company is offering 2.5M shares at an indicative price range of $4 to $5. Quiet periods expire on Shimmick (SHIM), Signing Day Sports (SGN), DDC Enterprise (DDC), and CAVA Group (NYSE:CAVA) to free up analysts to post ratings. Shares of CAVA have seen some selling pressure already ahead of the lockup expiration on concerns that some insiders will cash out. S3 Partners’ Ihor Dusaniwsky said the lockup expiry may make the stock much more shortable. “If insiders sell in size, which is a strong possibility with its +48% move above its $22 IPO offer price, stock loan availability may increase significantly if shares land in accounts which either lend their shares or are marginable and their shares are rehypothecated by their brokers,” he warned.

FOMC preview: The Federal Reserve is expected to hold its benchmark rate at 5.25% to 5.50% for the third consecutive meeting. While Fed officials do not appear to be ready to say the hiking cycle has ended, the pivot toward discussing lower rates has been made. Nomura expects the median rate projection for 2024 to factor in three 25-point rate cuts next year. The economic forecasts from the Fed are also expected to show a significant dovish shift, reflecting slowing growth momentum and faster-than-expected disinflation in recent months. Bank of America said the committee is not ready to shift from a tightening bias all the way to an outright easing bias, but could take the initial step of making its policy rate outlook more balanced by changing the existing language in the interest rate statement. Looking ahead, futures trading implies a 4% probability of a rate cut at the late January FOMC meeting and a 45% probability of a rate reduction at the March meeting.

Spotlight on Chewy’s: Chewy (CHWY) will hold the first investor day in the company’s history next week, just a few days after rattling investors with guidance for the holiday quarter that came in below expectations. While gaining market share in Q3, the online pet retailer pointed to industry-wide pressure as a potential headwind. The investor day event is anticipated to shift the focus back on the long-term growth story and path to improved profitability. Analysts think that volume leverage could be one of the biggest drivers of margin gains for the online retailer and a point of emphasis at the investor meeting. “Analyzing past filings reveals a large buildout of distribution infrastructure over the past 5yrs to accommodate growth, including a tripling of facilities as well as recent automation upgrades,” noted analyst Curtis Nagle. Chewy (CHWY) could also talk up the potential to see pharmacy and vet services sales soar in the coming years. Ahead of Chewy’s (CHWY) big day, Morgan Stanley pointed to analysis suggesting the pet industry macro has posed a greater headwind to CHWY’s top-line growth than the market appreciates, although it may be bottoming. Analyst Lauren Schenk noted that while many are concerned Chewy (CHWY) is losing market share, the firm’s view is that the weak pet macro is the primary driver of CHWY’s negative net adds since the start of 2022 and not competitive pressures. Shares of Chewy (CHWY) are down more 50% over the last six months. Short interest is still elevated on the stock at 16.6% of the total float.

Event schedule: The headliner event on the corporate calendar is Intel’s (INTC) AI Everywhere Event. The semiconductor giant said the event will include the launch of 5th Gen Intel Xeon processors for data centers and Intel Core Ultra processors for laptops. Other events that could jolt share prices include AECOM’s (ACM) Investor Day, Affirm Holdings’ (AFRM) Investor Meeting, L3Harris Technologies’ (LHX) Investor Day, Centene’s (CNC) Investor Day event, Couchbase’s (BASE) Analyst Day, U.S. Silica Holdings’ (SLCA) Investor Meeting, and Chewy’s (CHWY) first investor day event in the company’s history. Read Seeking Alpha’s Catalyst for a full event schedule.

Conference schedule: The healthcare sector will be on high alert with the 65th American Society of Hematology conference taking place in San Diego, California. The Hematology meeting has led to share price jolts from participants in the past. Arcellx (ACLX) and Pfizer (PFE) have been highlighted as two companies to watch. Other presenters of data include Eli Lilly (LLY), Agios Pharmaceuticals (AGIO), Corvus Pharmaceuticals (CRVS), IN8bio (INAB), Molecular Partners AG (MOLN), Rigel Pharmaceuticals (RIGL), Schrödinger (SDGR), Telomir Pharmaceuticals (TELO), Vor Biopharma (VOR), CRISPR Therapeutics (CRSP), Shattuck Labs (STTK), Bristol-Myers Squibb (BMY), and Incyte Corporation (INCY). Other conferences that could generate some news include the Seaport Digital Media & Advertising Virtual Conference, New Street Research BCG Future Series Conference, and Northland Capital Markets Virtual Artificial Intelligence Investor Conference.

The post Stocks To Watch: Fed Meeting, CPI Print, And Intel’s AI Event On Tap appeared first on Up2info.com.

• The generative AI hype has invaded the Data Center REIT space, with AMT similarly rallying by +31% since the recent October 2023 bottom.
• On the one hand, we are highly encouraged by AMT’s growing profitability, long-term leases, and future tailwinds, attributed to the growing data consumption.
• Combined with its relatively healthy balance sheet, it is apparent that the REIT is highly positioned for success, with the Fed pivot likely to further boost its prospects.
• On the other hand, with AMT pulling forward most of its near-term upside potential, we believe that there is a minimal margin of safety at these inflated levels.
• For now, existing investors may continue subscribing to their DRIP program, allowing them to regularly accumulate additional shares on a quarterly basis, thanks to the rich annualized FQ3’23 dividend payout per share of $6.48.

We previously discussed American Tower (NYSE:AMT) in September 2023, discussing its mixed prospects then, with the elevated interest rate environment triggering a drastic sell-off for most REIT stocks, AMT included. This was attributed to the dilutive/debt-laden nature of the business model.

Then again, we had opportunistically rated the stock as a Buy at $150s, given the raised forward guidance and healthy balance sheet, with the recommended entry point likely to unlock an expanded forward dividend yield of 4.32%.

It appears that our thesis has turned out as expected, with the AMT stock well supported at those levels before rallying tremendously afterward, as the October 2023 CPI implies a cooling inflation and an unlikely rate hike ahead.

Combined with its expanding profit margins and growing tailwinds from the 5G/ Generative AI transition, we are unsurprised by the immense optimism embedded in the REIT’s stock valuations.

However, with most of its near-term upside potential already pulled forward, we prefer to rerate the AMT stock as a Hold here, with these inflated levels offering investors with a minimal margin of safety.

The AMT Long-Term Investment Thesis Remains Robust, Albeit Inflated Now

For now, AMT has reported an exemplary FQ3’23 earnings call, with property revenues of $2.79B (+2.5% QoQ/ +6.8% YoY) and AFFO per share of $2.58 (+4.8% QoQ/ +5.3% YoY).

Based on the management’s raised FY2023 AFFO per share guidance range to $9.72-$9.85 (+0.2% YoY at the midpoint), compared to the previous range of $9.61-$9.79 (-0.6% YoY at the midpoint), it is apparent that 5G/ Data Center demand is outstripping supply.

This has triggered the recovery of AMT’s property gross margins to 71.2% (+0.9 points QoQ/ +2.2 YoY) and adj EBITDA margins to 64.4% (+1.3 points QoQ/ +2.9 YoY) by the latest quarter, finally nearing the FY2019 average of 71.4% and 63%, respectively.

Combined with its drastically richer Free Cash Flow generation of $892M (+12.6% QoQ/ +90.5% YoY) and FCF margins of 31.9% (+2.9 points QoQ/ +14 YoY), it is unsurprising that the REIT is on a roll over the past few quarters.

This has directly translated to AMT’s improved profitability metrics with TTM Interest Coverage Ratio of 2.63x, TTM AFFO Payout Ratio of 62.85%, and TTM Dividend Growth Rate of +10.9%, compared to the sector median of 1.77x, 74.55%, and +3.74%, respectively.

Its long-term prospects appear to be bright as well, thanks to the 5G and generative AI-Data Center tailwinds. Thanks to the sustained cord cutting and remote work trend, more consumers have been increasing their data/ broadband consumption.

The same has been highlighted by two of AMT’s largest tenants, including AT&T (T) and Verizon (VZ) in their latest earnings call, with “demand for better and faster broadband connectivity growing exponentially,” despite “the recent increase in prices by $10.”

This corroborates with the statistic, where the global mobile data traffic grew to 126 exabytes by Q1’23 (+6.5% QoQ/ +35.8% YoY), expanding at an aggressive CAGR of +44.35% over the past four years.

As a result, we believe that the management’s long-term projections are not overly ambitious, with the monthly data usage per smartphone expected to grow at a CAGR of +18% through 2028, further cementing the importance of wireless/ broadcast communications infrastructure REITs, such as AMT.

Most importantly, aside from the notable churn from T-Mobile (TMUS) through 2025, we believe that the REIT’s long-term prospects remain robust, based on its elongated lease term through 2031 for T and 2043 for VZ.

While the data center segment only comprises $211.9M (+3.4% QoQ/ +9.3% YoY), or the equivalent of 7.5% of AMT’s top-line in the latest quarter (+0.2 points QoQ/ +0.3 YoY), we are already seeing a YoY expansion in its gross margins to 57.4% (+0.7 points YoY) and operating margins to 49% (+0.4 points YoY).

We also want to highlight that its operating margins are notably improved compared to its Data Center REIT peers, such as Digital Realty Trust (DLR) at 4.1% (-9.1 points YoY) and Equinix (EQIX) at 18.4% (+0.4 points YoY) in the latest quarter.

Nonetheless, AMT investors may also want to temper their dividend expectations, attributed to the management’s choice to consistently “strengthen and de-risk our balance sheet,” naturally triggering the guidance of flattish dividend per share growth in 2024.

For now, the REIT has already strategically reduced its net leverage ratio to 4.89x by FQ3’23, down from 5.08x in FQ2’23 and 5.36x in FQ3’22. This is based on the annualized FQ3’23 adj EBITDA of $7.24B (+4% QoQ/ +10.3% YoY) and its long-term debts of $35.44B (inline QoQ/ YoY).

With $3.02B of debts maturing in 2024, we can understand why the AMT management has strategically focused on its intermediate term financial flexibility indeed.

This is especially since it is uncertain when we may see a normalized economy, despite the prediction of a Fed pivot by Q1’24.

So, Is AMT Stock A Buy, Sell, or Hold?

AMT Valuations

For now, AMT’s FWD Price/ AFFO valuation of 21.45x appears to be relatively rich, compared to September 2023 levels of 17.30x, 3Y pre-pandemic mean of 18.70x, and the sector median of 14.33x.

It may be noteworthy to highlight that the same premium is also observed in multiple data center REITs, such as DLR at 22.95x, EQIX at 25.73x, and Iron Mountain (IRM) at 16.54x.

This is thanks to the robust demand for cloud computing and generative AI services, consequently boosting the significance of 5G/ IoT/ data center REITs.

The Consensus Forward Estimates

However, we also want to highlight that the consensus estimates that AMT may only generate a top and bottom line expansion at a CAGR of +4.3% and +5.9% through FY2026, compared to its historical trend of +10.8% and +9.7% between FY2016 and FY2022, respectively.

As a result of the notable deceleration in its top/ bottom line growth, we believe that the stock is trading above its fair value of $182.80, based on the management’s FY2023 AFFO per share guidance of $9.78 at the midpoint and its normalized Price/ AFFO valuation of 18.7x.

There appears to be a reduced margin of safety to our long-term price target of $237.60 as well, based on the consensus FY2026 AFFO estimates of $12.71.

AMT 1Y Stock Price

Combined with the succession break out from its 50/ 100/ 200 days moving averages over the past few weeks, it appears that AMT may sustain its upward momentum to retest the upcoming resistance level of $212.

However, here is where we prefer to caution investors, since we believe that the rally has been overly fast and furious, with most of its upside potential already pulled forward.

As a result, we prefer to rate the AMT stock as a Hold (Neutral) here.

For now, existing investors may continue subscribing to their DRIP program, allowing them to regularly accumulate additional shares on a quarterly basis, thanks to the rich annualized FQ3’23 dividend payout per share of $6.48 and decent FWD dividend yield of 3.08%.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post American Tower: This Rally Is Too Hot To Handle appeared first on Up2info.com.

• American Tower specializes in owning and operating communication real estate, providing essential infrastructure for wireless networks.
• The company is expected to benefit from the double-digit growth of connected mobile devices in the US.
• American Tower has revised its financial outlook for 2023, showing positive growth in adjusted funds from operations and adjusted EBITDA.
• AMT has a strong dividend growth record, with ten consecutive years of raises.

Overview

American Tower (NYSE:AMT) has always been a standout REIT in my eyes. This is because I have owned shares of Verizon (VZ) and AT&T (T) for a very long time and have always been severely disappointed with the returns they provide. If you’re unaware of why I’m making the comparison, it’s because AMT specializes in the ownership, operation, and development of multi-tenant communications real estate. Think of the cell towers that millions of mobile phones connect to every single day through providers such as Verizon or AT&T.

In comparison, we can see that AMT has outperformed these two mobile companies in terms of total return over the last decade. While I feel disappointed in the performance of Verizon and AT&T, I feel relieved that AMT offers an alternative form of exposure to telecom that has performed well. AT&T and Verizon are fairly popular within the dividend community as both of these companies have extensive histories of increasing their payouts.

However, I believe that AMT should be included in the mix as they have increased payouts for 10 consecutive years and have a dividend CAGR of 16% over the last 5-year period. Based on the research to follow, I believe this growth will continue into the future.

American Tower boasts a comprehensive global portfolio, encompassing an extensive network of nearly 225,000 communication sites strategically distributed across the world. This extensive reach positions them as a key player in the telecommunications infrastructure sector by offering enhanced connectivity and communication services on a global scale.

A significant portion of AMT’s revenue is derived from leasing their properties. Their primary focus lies in furnishing the essential real estate infrastructure required for contemporary wireless communications networks.

Growth Contributors

A major catalyst for AMT is the expected growth rate of connected mobile devices in the U.S. The total amount of mobile devices connected is expected to grow at a CAGR (compound annual growth rate) of 7% throughout 2028. This data also goes side-by-side with the projected growth in device usage. The usage, calculated in petabytes, is expected to grow at a CAGR of 20% from 2023-2028. For context, a petabyte is a measurement of one million gigabytes.

The growth will certainly contribute to the traffic to AMT’s towers. There will be an increasing demand and as more of the population continues to use more devices, AMT is set to greatly benefit. In fact, projections show us that by the end of 2024, an estimated 70% of the population will own a mobile phone. That would be a pool of roughly 5.5 billion people that AMT has an exposure to.

What’s interesting is that this is the projection for the entire world, not just the USA. We can see from the graphic below that the estimated CAGR of smartphone data usage is in the double digits for all regions, with Brazil and Mexico leading the charge with an expected annual growth of 24%.

Growth in countries outside of the US may be much larger because of the increasing affordability of smartphones. That’s right, there are “budget-friendly” smartphone alternatives to the thousand-dollar iPhones that have become the norm. For example, you can get a high-quality smartphone such as the Google Pixel 7a for as low as $279.

Financials

AMT has revised its guidance for 2023 adjusted funds from operations (AFFO) upward, following a third quarter that surpassed expectations. The revised outlook for 2023 now anticipates AFFO per share in the range of $9.72 to $9.85. This revision only represents a minimal 0.3% year-over-year growth. However, AMT has raised its full-year adjusted EBITDA guidance to $7.01 billion to $7.09 billion, indicating a healthy 5.2% increase from the earlier projection of $6.95 billion to $7.03 billion.

The third quarter results of 2023 saw AFFO per share reaching $2.58, outpacing the average analyst estimate of $2.51. This marked improvement from $2.46 in Q2 and $2.36 in the corresponding quarter of the prior year. Total operating revenues for Q3 amounted to $2.82 billion. I really like the revenue picture here as over the last ten years, we can see the revenue growing substantially. Property revenue witnessed a commendable 7.0% increase, reaching $2,792 million, while adjusted EBITDA registered a substantial 10.4% growth, reaching $1,814 million.

Looking ahead, I stay optimistic about the company’s growth. Management’s ability to consistently increase revenue alongside a growing smartphone market will contribute to future success. When you break away from the financials and research of the growing markets, I look at it with one surface-level question: Over the next decade, will people spend more time glued to their phones? Probably.

Therefore, AMT is a good company to hold exposure to this telecom bet. Rather than bet on specific companies like the previously mentioned Verizon or AT&T, you can take a bet on the sector as a whole by going with AMT instead.

Dividends

As of the latest declared quarterly dividend of $1.62/share, the current dividend yield sits at 3%. This declared dividend also represents a 3.2% raise over the prior dividend of $1.57/share. The dividend growth story here is impressive. This is because they have increased dividends for 10 consecutive years while also having an average dividend CAGR of 16% of the last 5-year period. This growth crushes the sector median growth of an abysmal 0.24%. With a conservative AFFO payout ratio of 62%, the distributions here are safe and have plenty of room for continued growth.

The current yield is actually a bit higher than what the average was. Not only does this indicate undervaluation, but it also indicates that this may be an opportune time to start a position if haven’t already. The average dividend yield over the last four years has been quite low at around a yield of 2.23%. The interest coverage sits at 2.63x compared to the sector median of 1.77x. This ratio is important because it’s a gauge of how well covered a company’s interest on its debt is covered.

Valuation

While AMT is down 2% for the year, it had a recent run-up of over 30% from October to present day. This is following a fall of 27% from the start of the year to the end of September. Even after this run-up, there are several indications that AMT is still undervalued. AMT has historically traded at about 23x AFFO. Currently, the price sits at 21x AFFO which indicates slight undervaluation, even with the recent price run-up.

In addition, we can utilize a discounted cash flow model to get a rough estimate of a fair stock value. Using management’s expected EBITDA growth rate of 6%, we can determine that the fair stock value is $221/share. This would represent a modest potential upside of about 5% going into 2024. Combine this with a 3% dividend yield, you are looking at some solid annual growth potential.

Takeaway

American Tower presents a unique opportunity within the telecom space, particularly when compared to traditional telecom giants such as Verizon and AT&T. The performance trajectory of AMT over the past decade has exceeded that of the mobile carriers and serves as an alternative avenue for exposure to the industry. AMT’s consistent dividend growth, evident in its impressive 10-year streak and a remarkable 16% average compound annual growth rate (CAGR) over the last five years, sets it apart.

Financially, AMT’s upward revision of its 2023 adjusted funds from operations (AFFO) and adjusted EBITDA guidance reflects its strong performance, with a minimal 0.3% year-over-year growth in AFFO per share and a robust 5.2% increase in adjusted EBITDA. The third-quarter results underscore this trend, with AFFO per share surpassing estimates at $2.58 and total operating revenues reaching $2.82 billion.

Despite a recent run-up in its stock price, AMT appears undervalued, trading at 21x AFFO compared to its historical average of 23x. Utilizing a discounted cash flow model, the estimated fair stock value of $221/share implies a potential 5% upside in 2024, complemented by a solid 3% dividend yield.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post American Tower: Set To Benefit From Fast Growth Of Smartphone Market appeared first on Up2info.com.

• American Tower Corporation has a global portfolio with assets on 6 continents, including 200,000 towers and data centers.
• The company expects strong revenue growth due to the increasing demand for data transmission and processing in both 5G and autonomous driving.
• AMT’s recent results showed positive rent revenue growth, cost management success, and increased liquidity, but there are concerns about collection risk and valuation.

Dear readers,

American Tower Corporation (NYSE:AMT) is a major cell tower REIT similar to Crown Castle (CCI). I compared both REITs back in February, covered the main differences between the two and concluded that both represented good buying opportunities at the time. More recently, less than a month ago, I published a detailed piece on CCI.

Today, following Q3 2023 results, I want to provide readers with a more detailed review of AMT and show why I think the stock deserves a downgrade to a HOLD despite terrific recent results.

The portfolio

AMT has a global portfolio with assets on 6 continents. This includes about 200,000 towers, of which 43,000 are located in the U.S. In addition to towers, the company also owns data centers which it acquired through the relatively recent CoreSite acquisition.

The company expects to derive major synergies from data centers. In particular, they see a big opportunity for both 5G and data centers in autonomous driving. The idea is that training and operation of autonomous vehicles requires vast amounts of data to be transmitted and processed, which should result in high demand in both AMT’s business lines.

Moreover, data usage per device in AMT’s core markets is expected to grow by a CAGR of up to 18% over the next five years, which should drive strong revenue growth over the medium-term.

The roll-out of 5G is likely to happen in cycles similar to those of 3G and 4G. The cycle generally has three phases and results in two periods of peak investment into infrastructure, bridged together by a phase of moderate activity.

The first phase is all about increasing coverage through upgrading existing infrastructure and likely peaked in 2022 with record industry-wide investment of $40 Billion.

Management sees the first phase winding down today and expects carriers to start harvesting the network efficiency benefits of their investment in phase 2 which, based on experience with 4G cycles, should be characterized by more moderate spending. The expectation is for total spend of $35 Billion in 2023 and likely even less in 2024. In 2025 and beyond investment is expected to re-accelerate again, though I remain cautious of the timing, because management has already pushed back the expected growth from 5G a couple of times. And the current high interest rate environment is quite hostile to new investment, especially for highly leveraged telco carries.

AMT’s tenant mix is more diversified than that of CCI, but is still heavily weighted towards major US telecommunication providers, such as T-Mobile (17%), Verizon (12%) and AT&T (13%).

Because AMT has assets abroad, it also has a significant exposure to international carriers. This comes with pros and cons. Telecommunication infrastructure in emerging markets lags behind the US, which means that there is a longer growth runway and also a potential for higher returns (this is also evident from recent results, more on this below). But higher growth comes with higher risk. In particular, collection risk.

AMT has been struggling to get their rent paid in India since the start of this year, as laws aren’t as easily enforceable in emerging markets as they are in the US. Little progress has been made so far, AMT recorded $322 Million in goodwill impairment charges in Q3 and promised to finalize a strategic review of the business by the end of the year.

Recent Results

AMT’s third quarter results were really good.

The company saw its rent revenue increase by 6.3% YoY, a third consecutive quarter of 6%+ YoY growth. U.S. & Canada saw the lowest level of growth, partly due to the ongoing Sprint churn, at 5.3% YoY. But this was nicely offset by strong 8.2% YoY growth in Europe and as much as 12.8% YoY in Africa. The data center segment has also done remarkably well, growing their revenues by 9% YoY, well above the initial underwriting expectations.

Moreover, management’s declared focus on cost management has paid off. The cash SG&A as a percentage of revenue has declined by 70 bps, resulting in EBITDA margin expansion of 290 bps to 64.4%. Consequently, Adjusted EBITDA and AFFO per share both increase more than revenue by 10.4% YoY and 9.5% YoY, respectively. As a result of good performance and high visibility, management has raised their full year 2023 guidance across nearly all segments.

Beyond revenue growth, the REIT has also managed to increase its liquidity and reduce its leverage and floating rate exposure over the first 9 months of the year. Net debt to EBITDA now stands at a reasonable 5x level, floating rate debt exposure has been reduced by $4 Billion to less than 11% and the REIT has raised $1.5 Billion in senior unsecured notes (at an average rate of 5.9%) which it used to repay the outstanding balance on their revolving line of credit.

Valuation

The consensus is for AMT’s FFO to be roughly flat in 2024, mainly as a result of Sprint-churn, and for 8% growth beyond. But since the REIT has a history to pushing back the 5G-related growth, which is likely to be the main growth driver, I’m going to assume a more conservative 3% annual FFO growth in my forecast.

Next year AMT will have to refinance a $872 Million EUR-denominated facility at a current rate of 4.9% and three USD-denominated facilities worth a total of $2.15 Billion at an average current rate of 3.5%.

Assuming that interest rates stay at today’s level, we can use this year’s $1.5 Billion dollar refinancing (at a rate of 5.9%) as a benchmark. Refinancing next year’s debt at this rate will increase interest expense by $45 Million which is about 1% of AMT’s AFFO.

And in 2025, the refinancing impact would only be marginally higher at 1.2% of AFFO. It is therefore evident, that despite a relatively high floating rate exposure and some maturities, AMT’s cash flow will be more dependent on revenue growth as interest expense will likely be quite stable.

AMT currently pays a 3% dividend yield, which is the highest ever for the stock. The dividend yield is low for a REIT, but has growth at a solid 15%+ CAGR over the past 5 years and is very well covered with a payout ratio of 65%.

Beyond 3% FFO growth and 3% dividend, further upside will likely only materialize if interest rates drop.

The REIT doesn’t report NOI, but using their latest figures (and ignoring the Indian goodwill impairment), the annualized NOI is close to $7 Billion.

At a share price of $210 per share, AMT therefore trades at an implied cap rate of 5.3%, which is only 80 bps or so above the current 10-year treasury yield and well below CCI’s spread.

That’s a tight spread for a BBB- rated company which is currently experiencing issued with collections in India, the ongoing Sprint-churn and a relatively high floating rate exposure. All things considered, I’d be more comfortable with AMT trading at a 150 bps spread to long-term yields.

Assuming a 150 bps spread and a moderate decline in long-term yields to 4% by the end of 2025, produces upside of only 2%. And with a low dividend yield of just 3%, I don’t see how AMT can reasonably beat the market from these levels. Therefore I downgrade the stock to a HOLD here at $210 per share.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CCI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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The post American Tower Is Too Expensive appeared first on Up2info.com.

• American Tower stock is upgraded from strong sell to buy due to significant improvement in its technical picture and relative strength compared to peers.
• The stock is overbought but is supported by key support levels and positive seasonality in December.
• Falling Treasury yields and improving fundamentals, including revenue growth and margins, support a higher share price.

Back in July, I wrote a piece about telecom tower behemoth American Tower (NYSE:AMT) where I slapped a strong sell on the stock. That garnered quite the reaction from those loyal to the stock, but to be fair, I had plenty to be concerned about. Now, the stock is actually higher today than it was at the time, but there’s a bit of context that’s helpful in this case.

Shares lost 21% from when I said to sell and the ultimate bottom was made in October. I’m happy with that call, but today, I see a totally different stock. As such, I’m upgrading American Tower from sell to buy.

Immense improvement in the chart

Back in July, I said the stock was about to break down because its chart looked pretty awful. As we know, the stock did break down, but has absolutely blasted higher since the bottom in October. A huge amount of progress has been made technically, and to be honest, it looks pretty bullish now. What a difference four months can make.

I’ve drawn in two lines on the daily price chart above, one at $193, and one at $181. That corresponds not only to a very long consolidation that took place earlier this year, but also gap support from earnings-related moves in recent weeks.

In addition to that, we have the rising 20-day exponential and 50-day simple moving averages, which should provide additional support if called upon. The point is that American Tower’s technical picture has improved enormously, to the point where the bias is clearly up.

I’ll caution that the stock is extremely overbought, after a ~$50 rally in basically a straight line. The PPO at 4+ is not sustainable, and needs to come down. Now, it can come down via a consolidation, or it can come down through selling. I’d be surprised if we see a lot of selling, but that’s why we use support levels to limit risk. Those support levels in order are gap support at $193, the rising 20-day EMA at $190, and gap support at $181.

Part of the progress that’s been made is on a relative strength basis, and we can see below just how much progress has been made.

Since the October bottom, specialty REITs have outperformed the S&P 500 by about 5%. That’s good, but American Tower has beaten its peers by 16% in that same time, for total outperformance of about 21%. Doesn’t get much better than that, and what that means is that money is rotating into REITs, and of that money rotating into REITs, a lot of it is going to American Tower.

One more quick thing that I think supports the bulls is the weekly chart.

I’ve marked those same support levels – $193 and $181 – and you can see they correspond nicely to the major moving averages on the weekly chart. All of this support coinciding makes me more confident any pullback will be contained, and that the rally will resume afterwards.

From a seasonality perspective, bulls are supported as well. Below we have the past five years of AMT’s performance against the S&P 500, and we can see December is quite friendly to American Tower.

December averages 2.8% outperformance, so if we do get a pullback, again, it is likely to be shallow and short.

Plunging Treasuries are your friend

We know stocks like American Tower are held primarily for their income generation. That means they’re sensitive to prevailing interest rates, and there’s some interesting correlation to Treasuries. Let’s take a look.

I’ve chosen the 10-year Treasury here, and we can see first that yields have been destroyed since mid-October. They’re in a downtrend now – as defined by price being below the major moving averages – and that’s been great for rate-sensitive stocks. In the bottom panel, I’ve charted AMT’s correlation to the 10-year Treasury for 125 days, which is six months of trading activity. That correlation is pretty much always negative, but has been very negative for a few months, standing today at -0.63. That just means they move in opposite directions most of the time. Now, if Treasury yields are falling, and it’s inversely correlated to AMT’s share price, well, you know the rest.

Improving fundamentals also support bulls

Last time, I mentioned that AMT’s growth prospects didn’t look so hot. And while this is certainly no growth stock, I’d argue we’re seeing exactly what we need to support the big move we’re seeing in the stock.

Revenue growth is ticking higher, with the most recent quarter at +5.5% after bottoming under 4% in the prior two quarters. Is there work left to do? Absolutely. But if you wait for the numbers on this chart to print higher, it will be too late to buy the stock. American Tower’s revenue growth has always been pretty lumpy, but it looks to me like we’re moving in the right direction. Keep in mind also that as these weak quarters are lapped into next year, comparisons get easier, and YoY growth rates will be commensurately higher than they otherwise would be.

Margins are on the march as well, and again, we’re seeing easier comparisons that could drive further growth. I won’t belabor the point but it certainly appears the fundamentals are supportive of a further move.

Indeed, estimates for FFO-per-share continue to rise, with 2023 estimates about 5% higher than they were three and six months ago. We’ll see if this continues into the out years, but current forecasts are for solid FFO expansion in the coming years. Recent progress on revenue and margins is supportive of this.

Wrapping up

As we look to tie up the loose ends here, the technical picture has improved immensely, and I think the fundamental progress that was made in the last quarter on the revenue and margin fronts is supportive of a higher share price. With Treasury yields falling, we have a perfect storm for American Tower bulls.

But one more thing I think supports a higher share price is the downright cheap valuation we have today. This stock is never cheap in the traditional sense, so there’s no point sitting around waiting for a forward PE of 8 or something like that. Shares are 20X forward FFO at the moment, and that is cheap for AMT.

It’s 4X lower than the three-year average, and 11X lower than the peak, so anyway you look at this, AMT is cheap. It’s a high quality name with a big moat; you have to pay up to own something like that.

Seeking Alpha’s Quant Rating on AMT is 3.32, good for a Hold. You can see the only black eye for AMT is the valuation, but I actually think the valuation is better than D- given AMT’s unusual valuation history. At any rate, the Quant Rating just a month ago was 2.27, or Sell. It’s rapidly improving, and that’s exactly the kind of stock I want to own.

I was down on AMT four months ago, but the situation has changed comprehensively. As such, I’m changing my mind, and I’m upgrading AMT from strong sell to buy. I think we may see a consolidation or pullback in the short-term, but this stock is setting up for a very strong end to 2023, and start to 2024.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in AMT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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The post American Tower: 2-Notch Upgrade From Sell To Buy appeared first on Up2info.com.