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Why You Should Hold American Tower (AMT) Stock Amid Risks

On Jun 27, 2017, leading international wireless tower operator, American Tower Corp.AMT was downgraded by a notch to Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

American Tower continues to benefit from increased investment of wireless carriers in 5G networks. Next-generation 4G LTE and 5G networks along with increased usage of smartphones and tablets are building up demand for tower leasing. Additionally, the company's increased investments in Asia are paying off. We expect the benefits to reflect in the upcoming results.

We further believe American Tower's tower buyouts in emerging markets will drive its top line and lend it a competitive edge. The company's Indian, EMEA and Latin American operations account for almost 50% of its organic core revenue growth.

American Tower continues to generate most of its revenues from long-term (typically 5-10 year) tower leases with major wireless carriers. Further, the company provides on-site maintenance as well as servicing of antennas, amplifiers and base station equipment. The $100-million tower lease agreement with U.S. telecom behemoth AT&T Inc. T has helped the company raise 2017 revenue guidance.

We are also impressed with American Tower Corporation's efforts to reward stockholders with a quarterly cash distribution of 62 cents per share on shares of its common stock. The distribution will be paid on Jul 14, 2017 to such stockholders of record at the closure of business on Jun 19, 2017.

We believe American Tower's efforts to ramp up its business helped it outperform the Zacks categorized Reit- Equity Trust Other industry in the past six months. The stock gained over 12.15% compared with the industry's growth of 5.42%.

Meanwhile, high customer concentration, foreign currency exchange rate risks, stiff competition, integration risks, rising operating expenses and a highly leveraged balance sheet act as major dampeners to American Tower. Further, the ongoing consolidation trend among telecom and cable TV operators may lead to serious financial fluctuation for the company in the to-be reported quarter.

Additionally, the company's upcoming results face threats from emerging technologies like Voice over WiFi (VoWiFi). Also, American Tower competes fiercely with tower operators like Crown Castle International Corp. CCI and SBA Communications Corp. SBAC .

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American Tower Corporation (REIT) (AMT): Free Stock Analysis Report

Crown Castle International Corporation (CCI): Free Stock Analysis Report

SBA Communications Corporation (SBAC): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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