This is going to be short and sheet as we now say……given we had 18 companies report and my wrist hurts.
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evenue, Adjusted EBITDA, and subs were essentially in-line with Consensus; though there continue to be questions around the rebranding and system conversion costs that are added back to EBITDA. But, that isn’t really anything new. In terms of the call, there wasn’t anything surprising - the Fidelity acquisition closed on 10/1 as expected, the rebrand to Sparklight continues (and is apparently having some kind of an effect – though it isn’t really showing up in the numbers), customers continue to take higher speeds and use more data, and CABO is always looking for the next opportunity for M&A. That all said, there was nothing in today’s print or call that changes our overall thesis on the stock – we like the operations and roll-up strategy but continue to struggle with valuation given CABO’s mystifying multiple (a 4x+ premium to cable and a ~1-2x premium to utilities on ’20 EBITDA). At the end of the day, we remain Peer Perform with no price target.
Here is what we’ve been hearing this long insane week – which is going to be followed by another one of what I will call “WORST WEEKS EVER.” Yep – you guessed it. Media earnings time. Thankfully though, Hans (CBS) and Franz (VIAB) are reporting the week after….
In this note, we perform detailed work on the LT mobile opportunity (ATUS, CMCSA, CHTR); look at valuation relative to historical trends and the S&P; and adjust our models for billing conversions (ATUS), price increases (CHTR), softer non-cable trends (CMCSA) and lengthy carriage fights (DISH). Last, we rollforward our price targets to Y/E 2020 from June 2020E. We remain Outperform on ATUS (31% upside) and CMCSA (23% upside) and Peer Perform on CHTR (10% upside), DISH (10% upside) and CABO (N/A).
The hottest names this week were ATUS (369 bps better than the S&P), NFLX (310 bps), CHTR (355 bps), GTN (354 bps), and SBGI (306 bps).
After being on the road most of this week (NYC meetings and the Midwest) and getting in way late last night, we wanted to share some of the lovely Media sentiment that will brighten your weekend….not.
The hottest names this week were CMLS (973 bps better than the S&P), IHRT (900 bps), CHTR (619 bps), OUT (463 bps), and NFLX (435 bps).
The hottest names this week were IHRT (414 bps better than the S&P), OUT (362 bps), LAMR (209 bps), CCO (207 bps), and WWE (162 bps).
Happy Friday the 13th. Although as one of my best buds on FB said, “I’d take Friday the 13th over any Monday.” So true.
Here’s what we have been hearing this week….
Hope you had a great summer. Just wanted to pass along some of the tidbits from our convos in what felt like the longest short week ever.
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