On Wednesday, Citi analysts updated their outlook on Altice USA (NYSE: ATUS), increasing the price target to $3.00 from the previous $2.50. The firm retains its Buy rating on the stock. The revision reflects a new weighted average cost of capital (WACC) in their discounted cash flow (DCF) analysis, which now includes the anticipated enhanced terminal value from Altice's fiber deployments.
The analyst noted that Altice USA has several opportunities to enhance its operations and financial standing. These include cost reduction, stabilization of financial leverage, monetization of non-core assets, and retaining the strategic flexibility to potentially sell if the cable sector experiences further consolidation.
The updated price target also takes into account the company's recent broadband pricing updates and customer framework changes, which could lead to revenue growth from customer upgrades and positive pricing actions in 2025.
According to the analyst, the financial performance of Altice USA will become increasingly crucial, especially with significant debt refinancing activities expected to begin in 2027. They mention that any further decline in annual EBITDA generation could pose a risk to their positive outlook on the company.
Altice USA's strategic moves, such as the refresh of its broadband rate card and the initiation of a new customer framework, are seen as potential drivers for the company's future success. The analyst believes that these initiatives could provide an upside to their broadband revenue forecasts.
The firm's analysis indicates that the company's efforts in improving operations and managing financial leverage may help Altice USA navigate the competitive cable industry and its challenges.
The company's focus on fiber deployment and strategic options in the face of industry consolidation are key factors in Citi's maintained Buy rating and increased price target.
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