Charter’s Q4 Earnings: Will Optimism Prevail?



On Friday, Charter Communications (NASDAQ:CHTR) is scheduled to release its fourth-quarter earnings results before the market bell. Wall Street analysts expect the company to post sales of $11.74 billion in the fourth quarter. The figure would mark a rise of 4.5% YoY (year-over-year) compared to $11.23 billion in the fourth quarter of 2018. Analysts also expect the company’s earnings to rise 92.2% YoY to $2.48 in the fourth quarter. Analysts expect Charter’s 2019 and 2020 sales to rise by 4.8% and 5.5%, respectively. Meanwhile, they expect adjusted EPS growth in 2019 and 2020 of 29.7% and 96.8%, respectively.

In the fourth quarter, Charter Communications expects to lose net pay-TV customers due to competition from online streaming services like Netflix. However, the company will likely add net broadband customers due to increased demand for a fast Internet connection.

Article continues below advertisement

Analysts’ consensus recommendation for Charter

About 34 analysts cover Charter Communications stock as of today. Among the analysts, 20 recommend a “buy,” 13 recommend a “hold,” and one recommends a “sell.” According to analysts’ consensus, the stock has a mean target price of $516.00 and a current market price of $490.74, which suggests an upside potential of 5.1% in the next 12 months. The median target price is $525.00 today.

Revised target price

On Wednesday, Credit Suisse analyst Douglas Mitchelson raised his target price on Charter Communications stock to $520 from $420 with a “neutral” rating. Mitchelson increased the target price because he expects the company to report strong fourth-quarter earnings results.

On January 22, KeyBanc analyst Brandon Nispel increased its target price on Charter Communications stock to $576 from $515. He maintained the “overweight” rating on the stock. According to TheFly, Nispel thinks that the company “should benefit from its business mix moving toward its growth businesses of residential broadband and commercial services. The analyst continues to model moderate broadband subscriber deceleration, which could be conservative, and believes Spectrum mobile remains an upside driver in 2020 and beyond.” The report also said, “With very strong growth prospects in 2020, he maintains there is upside remaining in shares.”

On January 22, Nomura Instinet analyst Gregory McNiff raised its target price on Charter Communications stock to $470 from $420 with a “neutral” rating.

Article continues below advertisement

On January 16, Morgan Stanley analyst Benjamin Swinburne downgraded Charter Communications stock to “equal weight” from “overweight.” However, the analyst increased its target price on the stock from $500 to $540. According to TheFly, Swinburne “thinks 2020 may be the peak EBITDA growth year. Also, while 2020 should see continued momentum on the customer front and consensus calls for share buybacks of $8B-$9B, these robust expectations are reflected in shares current price, said Swinburne.” The report also said, “He also noted that if a Democrat is elected, the FCC could move back to Title II classification for broadband, which he does not believe would impact Charter’s fundamentals but could be a possible source of downside risk.”

Earlier this month, Evercore ISI and TD Securities raised their target prices from $500 to $600 and from $490 to $495, respectively.

Peer comparison

In the fourth quarter of 2019, Comcast (NASDAQ:CMCSA) reported revenues of $28.4 billion, which implies a rise of 2.0% YoY. Also, the company reported an adjusted EPS of $0.79 in the fourth quarter, which implies a rise of 23.4% YoY. Read Key Takeaways from Comcast’s Q4 Earnings to learn more.

Dish Network (NASDAQ:DISH) will likely report its fourth-quarter results next month. For the fourth quarter, analysts expect the company’s adjusted EPS to fall by 7.8% YoY to $0.59. They also expect Dish Network’s revenue to fall by 4.8% YoY to $3.15 billion.

Chater’s stock performance

Charter Communications stock closed 1.72% lower on Wednesday and ended the trading day at $490.74. The stock was trading 5.1% below its 52-week high of $517.07 and 53.7% above its 52-week low of $319.30. At the closing price on Wednesday, Charter Communications’ market cap was $105.4 billion. On a YTD (year-to-date) basis, the stock has risen about 1.2%.

Charter Communications closed 2.4% below its 20-day moving average of $502.63. The stock closed 1.3% and 6.3% above its 50-day and 100-day moving averages of $484.66 and $461.70, respectively. Meanwhile, the stock’s 14-day relative strength index score of 45 shows that it isn’t overbought or oversold.

Read Is Charter Stock an Attractive Buy at Its Current Price? to learn more.


More From Market Realist