SBA Communications Faces Market Challenges Despite Strong Fundamentals
Financial Overview: Mixed Results in a Booming Market
SBA Communications Corporation (SBAC), based in Boca Raton, Florida, is a major player in wireless communications infrastructure. The company owns and operates towers, rooftops, distributed antenna systems (DAS), and small cells, with a market cap of $24.4 billion. SBAC provides site leasing, development, construction, and consulting services, primarily leasing antenna space on multi-tenant towers to various wireless service providers under long-term contracts.
Stock Performance: Struggling Against the Competition
Over the last year, SBAC’s stock has not kept pace with the broader market. The company’s shares have declined by 3.8%, while the S&P 500 Index ($SPX) has surged nearly 31.8%. In 2024, SBAC has seen a downturn of 9.9%, contrasting with the SPX’s 25.8% increase year-to-date.
Comparison to Industry ETFs: Falling Behind
When looking at the iShares U.S. Digital Infrastructure and Real Estate ETF (IDGT), SBAC’s struggles become clearer. The ETF has gained approximately 38.8% over the past year and is up 26.2% so far this year, significantly outpacing SBAC’s single-digit losses in the same timeframe.
Quarterly Results: Meeting Expectations with Mixed Revenue
On Oct. 28, SBAC reported its Q3 results, closing the day slightly down. The adjusted funds from operations (AFFO) came in at $3.32, aligning with analysts’ predictions. However, the company’s revenue of $667.6 million fell short of expectations, which were set at $669 million. SBAC forecasts full-year AFFO between $13.20 and $13.45 and revenue ranging from $2.66 billion to $2.68 billion.
Analyst Outlook: Mixed Ratings but Strong Past Performance
For the current fiscal year ending in December, analysts predict a 4.7% decline in funds from operations (FFO) to $12.56 per diluted share. Despite this, SBAC has a solid earnings surprise history, beating consensus estimates in the past four quarters. Among 18 analysts covering SBAC, the consensus rating is “Moderate Buy,” which includes 10 “Strong Buy” ratings, two “Moderate Buys,” and six “Holds.”
Future Projections: Potential Upside Despite Current Struggles
On Nov. 18, Barclays PLC (BCS) analyst Brendan Lynch maintained an “Overweight” rating and raised the price target for SBAC to $257, suggesting a possible upside of 12.5% from current levels. The average price target stands at $258.18, indicating a 13% premium compared to SBAC’s current price. Additionally, the highest price target from analysts at $300 suggests a substantial upside potential of 31.3%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For further details, please refer to the Barchart Disclosure Policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
