Charter finishes higher as Benchmark sees hefty upside in pullback
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In a mixed market today, Charter Communications (NASDAQ:CHTR) moved up 1% amid a relative defense at Benchmark, which acknowledged that analyst warnings on broadband subscriber slowdowns may have been taken too far to heart by investors.
It's trimming its price target to $900 from $925 on "market conditions, while not manipulating our fundamental valuation to acknowledge the freefalling stock chart," analyst Matthew Harrigan says.
He's maintaining a Buy rating, though. In the summer, along with other analysts, the firm moderated expectations for broadband growth through 2025, "although were admittedly naÃ¯ve on market hypersensitivity to any visible slowdown" - even as management said 2021 softness was more about transient issue than hotter competition.
Meanwhile, "Beyond broadband, the market may be underestimating valuation upside from Spectrum Mobile off Wi-Fi and offloading Verizon MVNO traffic to CBRS spectrum," Harrigan says.
As for inflation, even a bearish inflation breakout or competitive scenario that caused pricing power to fall a permanent 3% relative to costs still generates a fair value of $590, above current price, he says.
The lowered $900 target still implies a hefty 61% upside.
On Monday, RBC boosted its rating to Outperform, also thinking that the stock's decline (down 31% from August) is overdone.