SBA Communications Shows Resilience as 5G Demand Rises

Valued at a market cap of $23.7 billion, SBA Communications Corporation (SBAC) is an independent owner and operator of wireless communications infrastructure, including towers, buildings, rooftops, distributed antenna systems (DAS), and small cells. Based in Boca Raton, Florida, the company generates revenue primarily through site leasing and site development services.

Large-Cap Classification and Market Position

Companies with a market cap of $10 billion or more are classified as “large-cap stocks,” and SBAC fits this category well, reflecting its significant influence and size within the REIT-specialty sector. The company is experiencing an increased demand for 5G networks and mobile data usage, enhancing the value of its infrastructure to telecom providers. Additionally, its asset-light business model and the ability to secure long-term lease agreements with major carriers such as AT&T Inc. (T) and Verizon Communications Inc. (VZ) fortify its competitive stance in the industry.

Recent Trading Performance

This REIT is currently trading 12.8% below its 52-week high of $252.64, achieved on October 16, 2024. Over the past three months, SBAC shares have increased by 8.2%, while the broader Dow Jones Industrial Average (DOWI) experienced a decline of 1.3% during the same period.

However, over the longer term, the performance of SBAC shares has only increased by 3% over the past 52 weeks, compared to DOWI’s gain of 6.1%. Additionally, on a six-month basis, SBAC shares show a decline of 9.2%, contrasting with the Dow’s minimal downturn.

Trading Trends and Earnings Performance

To confirm its recent bullish trajectory, SBAC has been trading above its 200-day moving average since late February, with minor fluctuations, and has consistently remained above its 50-day moving average since early February.

On February 24, SBAC released its Q4 earnings, which indicated a better-than-expected performance. Following the results, shares closed up 3%. The company reported an AFFO of $3.47 per share, reflecting a 3% increase from the previous year and surpassing the consensus estimate of $3.37. Strong growth in site leasing and development revenues contributed to a total revenue increase of 2.8%, reaching $693.7 million—also exceeding Wall Street projections by 1.8%. Furthermore, operating expenses dropped by 33.1%, resulting in an impressive 82.3% year-over-year increase in operating income, totaling $382.3 million.

Looking forward, SBAC ended 2024 with its highest backlog for leasing and services, which positions it favorably for growth in 2025. For fiscal 2025, the company forecasts AFFO per share to range from $12.40 to $12.76.

Competitive Landscape and Analyst Outlook

SBAC has outperformed its rival, Crown Castle Inc. (CCI), which recorded a negligible gain over the past 52 weeks and a 12.2% decrease over the last six months.

In light of SBAC’s recent outperformance compared to the Dow, analysts maintain a moderately optimistic outlook for the company. The stock has a consensus rating of “Moderate Buy” from 19 analysts. The mean price target of $248.56 suggests a potential 12.8% upside from the current share levels.

On the date of publication, Neharika Jain did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data presented are for informational purposes only. For more insights, please view the Barchart Disclosure Policy here.

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