Crown Castle Inc. Faces Challenges Despite Solid Earnings Report
Underperformance Against Market Benchmarks
Houston-based Crown Castle Inc. (CCI) is a prominent real estate investment trust (REIT) specializing in cell towers and fiber network infrastructure. With a market cap of $46 billion, Crown Castle oversees a vast portfolio of over 40,000 cell towers and nearly 90,000 route miles of fiber. Their solutions are deployed across all major U.S. markets.
Stock Performance Lags Behind S&P 500
Over the past year, CCI’s stock has underperformed compared to the broader market. It has shown a gain of 9.5%, while the S&P 500 Index ($SPX) has surged almost 36.8%. In 2024, CCI shares have declined 8.1%, in stark contrast to the SPX, which has seen returns of 25.7% year-to-date.
Comparison with Real Estate Sector
Breaking it down further, CCI has also fallen behind the Real Estate Select Sector SPDR Fund (XLRE) in the same period. The ETF has risen by 27.1% over the last year and achieved a gain of 9.6% in 2024.
Q3 Earnings Report and Market Response
On October 16, Crown Castle reported its Q3 earnings. Following the announcement, shares dropped by more than 3% after the company projected a full-year adjusted EBITDA between $4.14 billion and $4.19 billion, with the midpoint falling below the consensus estimate of $4.17 billion. However, a positive takeaway was the reported adjusted funds from operations (AFFO) of $1.84 per share, significantly exceeding expectations.
Analysts’ Expectations for the Fiscal Year
For the current fiscal year, which ends in December, analysts anticipate an 11.9% decrease in funds from operations (FFO) to $6.65 per diluted share. Notably, CCI has a strong earnings surprise history, having outperformed consensus estimates in each of the last four quarters.
Mixed Analyst Ratings
Despite the earnings history, CCI’s consensus rating among 19 analysts is currently a “Hold.” This rating includes four “Strong Buy” recommendations, one “Moderate Buy,” 13 “Holds,” and a single “Strong Sell.”
Price Target Adjustments by Analysts
After the latest earnings report, Barclays PLC (BCS) adjusted its price target for Crown Castle from $116 to $117 on November 1, maintaining an “Equal-Weight” rating. The average price target of $115.94 suggests a potential increase of 9.5% from current levels, while the highest target of $128 indicates a possible 20.9% upside.
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On the date of publication, Kritika Sarmah did not hold (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 more information, please view the Barchart Disclosure Policy here.
The views expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
