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Charter Communications faces analyst warnings on broadband revenue challenges

Citigroup analyst Michael Rollins downgraded Charter Communications Inc from Neutral to Sell and lowered the price target from $280 to $255. The stock fell on Wednesday.

The analyst noted that Charter faces risks to both estimates and valuation as the organic broadband environment becomes tougher relative to consensus expectations.

The discontinuation of the Affordable Connectivity Program (ACP) is likely to exacerbate broadband subscriber and revenue headwinds over the next 12 months, and consensus 2025 EBITDA expectations seem too optimistic, as per Rollins.

The reduction in his target price reflects an FV/EBITDA multiple contraction to 6.0x on his below-consensus EBITDA outlook for 2025, partly offset by some recognition of FCF’s future recovery once it gets through this elevated capital investment cycle.

Rollins noted the upcoming second-quarter and third-quarter results as potentially harmful catalysts that are likely to highlight the headwinds on broadband pricing and volumes, especially with ACP’s recent discontinuation and unlikely revival.

Charter Communications Stock Prediction For 2024
When buying a stock for a longer time horizon, it is important for investors to assess where they think the stock is headed in the future.

When mapping a stock’s future trajectory, investors should consider factors including the future earnings expectations and expected performance against a benchmark.

Charter Communications revenue has grown at an average rate of 4.26% annually over the past 5 years. The average 1-year price target from analysts is $285.82, representing an expected -5.12% downside in 2025.

While past performance is not a guarantee of future results, investors should also look at a stock’s historical performance when compared to both a benchmark index and the company’s peers. Shares of Charter Communications have seen an annualized return of -25.35%, underperforming the S&P500 index by 33.6%. This compares to -7.73% growth in the overall Communication Services sector. Charter Communications has a beta of 1.22.

CHTR Price Action: Charter Communications shares closed lower by 0.74% at $301.25 on Wednesday. Market.BusinessInsider

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