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KeyBanc Upgrades Charter Communications On Price Hike, Broadband Potential

Priya Nigam

Given Charter Communications Inc’s (NASDAQ: CHTR) recent price increase, estimates for 2020 appear overly conservative, according to KeyBanc Capital Markets.

The Analyst

KeyBanc’s Brandon Nispel upgraded Charter Communications from Neutral to Overweight and established a price target of $515.

The Thesis

Broadband continues to be a significant secular driver, as Charter Communications would benefit from increased penetration rates and higher ARPUs (average revenue per user) due to increase download speed take rates, Nispel said in the upgrade note.

He added that the company also seems poised to benefit from an overall mix shift to higher-margin “Growth Business.”

Charter Communications has started informing customers of price increases from October. This includes price hikes for Spectrum Video packages, Broadcast TV and standalone internet. “While we expect a modest negative impact on Video and Broadband subscribers, our Residential Video and Broadband estimates move significantly higher,” Nispel wrote.

He raised the revenue estimates for 2019 and 2020 from around $45.52 billion to $45.77 billion and from $47.82 billion to $48.58 billion, respectively.

Competition from Fiber to the Home providers and potential 5G Home launch is unlikely to limit Charter Communications’ opportunity over the next two to three years, the analyst added.

Price Action

Shares of Charter Communications were up 1.76% at $424.02 Friday morning.

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Latest Ratings for CHTR

Date Firm Action From To
Oct 2019 Maintains Buy
Oct 2019 Upgrades Sector Weight Overweight
Sep 2019 Maintains Buy

View More Analyst Ratings for CHTR
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