Jefferies analyst Jonathan Petersen downgraded Crown Castle (CCI) to Hold from Buy with a price target of $84, down from $127. The sale of the company’s fiber business is unlikely to be a positive catalyst for the shares, the analyst tells investors in a research note. The firm believes the sale is less likely to be at an attractive multiple, “if it sells at all.” Press reports of valuations in the $8B-$10B range are disappointing, as they imply a 6-8 times EBITDA multiple, which would drive “material earnings dilution,” contends Jefferies. Further, it estimates a sale would likely necessitate a 15%-25% cut in the dividend to maintain a healthy payout ratio, and might be even more if the board decides to prioritize retained cash flow.
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Read More on CCI:
- FedEx to separate Freight unit, Nike reports Q2 beat: Morning Buzz
- Crown Castle fiber sale likely prompts dividend cut, says Wells Fargo
- TPG in advanced talks to acquire Crown Castle fiber unit for $8B, Bloomberg says
- TPG in advanced talks to acquire Crown Castle fiber unit, Bloomberg says
- Crown Castle downgraded to Underweight from Equal Weight at Wells Fargo
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
