Investing.com -- MoffettNathanson analysts refreshed their valuations for U.S. tower companies following recent industry developments, including strong year-to-date performance and Crown Castle’s sale of its Fiber business.
The firm maintained Buy ratings on American Tower (NYSE:AMT), Crown Castle (NYSE:CCI), and SBA Communications (NASDAQ:SBAC) but stopped short of calling them "pound-the-table longs" after recent outperformance.
"After substantial underperformance over the last several years, tower equities have meaningfully outperformed the market for the first time in a while," analysts noted.
Year-to-date, AMT and CCI have beaten the S&P 500 by 20 percentage points, while SBAC has outperformed by 12 points.
The firm notes that the rally has been fueled in part by a rotation into defensive names amid market volatility.
The Crown Castle Fiber sale was said to be another key development. The $8.5 billion sale price, though about half of the company’s total investment in the assets, was "reasonably in line with expectations," analysts said.
The transaction allows CCI to become a pure-play U.S. tower company, justifying its higher valuation multiple.
Following valuation adjustments, the firm raised target prices across the sector:
AMT’s target price was raised from $206 to $239, with the CCI target increased from $105 to $122, and SBAC moved from $233 to $253.
"Crown Castle now trades at a meaningful premium to American Tower and SBA… but it should, since U.S. towers warrant the highest multiple," analysts wrote.
Despite mid-teens upside potential, the firm sees all three stocks as equally attractive, noting that "they warrant Buy ratings, but we wouldn’t describe them as pound-the-table longs after their recent outperformance."