SBA Communications Corp. is scheduled to report its third-quarter results after the market close Monday, with investors focused on carrier activity, cash taxes and the outlook for wireless infrastructure demand.
The tower operator exceeded expectations in the previous quarter, recording earnings per share of $1.87 against a forecast of $1.84 and revenue of $715.3 million. For the September quarter, analysts expect EPS of $2.09 and revenue of $724.32 million. Those estimates would represent sequential increases of 12% and 1.3%, respectively, while remaining slightly below the year-earlier levels.
Analysts remain generally positive on the company, valued at $19.85 billion. Eleven of 21 analysts rate the stock a Buy, and the consensus price target of $225.25 suggests roughly 20% potential upside from its current price of $187.15. EPS estimates have risen 0.29% over the past 60 days, while revenue forecasts have changed little.
Recent target reductions, however, indicate a more cautious outlook among some firms. Since late September, four analysts have lowered their targets, including Bernstein, which reduced its forecast to $208 from $219, and Wells Fargo, which cut its target to $205 from $210. Raymond James moved in the opposite direction, raising its target to $271 from $264 in early October after revising its cash-tax assumptions for SBA’s Brazil and Millicom operations.
The company’s cash-tax trajectory will be a key issue in the report. Raymond James analyst Richard Prentiss said previous estimates had been too severe and argued that the increased tax burden was mainly linked to international markets where restructuring benefits had ended. Investors may look to adjusted funds from operations for evidence that this view is holding up.
Carrier spending will also be closely monitored. In the previous quarter, management said customers were upgrading existing sites and expanding networks through new colocations. Investors are expected to assess whether 5G densification and spectrum deployments remain strong, including the potential impact of FCC Auction 115 on future network construction.
SBA’s international operations add another area of uncertainty. The company previously removed all contracted revenue from EchoStar, and investors continue to look for signs that customer churn has stabilized across its markets in the Americas and Africa.
The broader 5G tower market is expected to expand at an annual rate of 11.6% through 2031, although new services such as SpaceX’s Starlink mobile offering are increasing competitive pressure on traditional carriers and could influence long-term demand for tower leases.
SBA shares are trading near the midpoint of their 52-week range of $156.60 to $224.46. The upcoming results will indicate whether the company’s recurring tower-lease model can maintain its momentum as the wireless infrastructure industry faces changing competitive and operating conditions.
Sources: Investing.com News.