On Jun 6, we maintained our Neutral recommendation on
American Tower Corp.
), as the company's bottom line missed the Zacks Consensus
Estimate but top line surpassed the same in the recently
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis
EQUINIX INC (EQIX): Free Stock Analysis
SBA COMM CORP (SBAC): Free Stock Analysis
To read this article on Zacks.com click here.
Why Remains Neutral?
Higher adoption of smartphones/tablets coupled with increased
deployment of 3G/4G networks by the carriers across the world
will continue to drive the demand for tower space going forward.
American Tower is rapidly expanding its business operations in
various emerging markets. In addition to Brazil and Mexico,
American Tower has taken a major initiative to expand its
operations in India. The company is already on the verge of
acquiring 8,000 wireless towers of Tower Vision, a privately held
Indian wireless tower operator. This will generate long-run
sustainable business for the company.
Moreover, the company has started offering cost-effective outdoor
Distributed Antenna Systems (DAS) to its customers.
Management indicated that DAS has the potential to reach 2.0% of
American Tower's total revenue over a period of three to five
On the downside, American Tower has a substantially leveraged
balance sheet. At the end of the first quarter of 2013, the
company had nearly $8.79 billion of net debt (total debt-cash
& cash equivalents) and a debt-to-capitalization ratio was
0.70. Very high level of indebtedness increases the possibility
that the company may not be able to generate sufficient amount of
cash to meet its debt obligations in the future. This may also
hinder the company's effort to access the debt market to borrow
and refinance at favorable rates.
Furthermore, higher customer concentration for American Tower
coupled with huge exposure to foreign exchange rate risks will
act as headwinds for the company going forward.
Currently, American Tower has a Zacks Rank #3 (Hold).
Other Stocks Outlook in Related Industries
Other stocks in the wireless tower industry include
Crown Castle International Corp.
SBA Communication Corp.
). Currently, both Crown Castle and SBA Communication have a
Zacks Rank #2 (Buy) while Equinix has a Zacks Rank #3 (Hold).