Altice USA: 16% Correction Was Overreaction To Q2 Broadband Stability (Preview)

Company Update (ATUS US) (Buy)

Summary

• ATUS stock has fallen 15.5% since Q2 results on July 28, which we believe to be an over-reaction and represents an opportunity.

• Zero organic Broadband net add in Q2 was due to COVID-related move churn and the end of mandated payment extensions.

• Competition has remained manageable, ATUS is confident about H2, and "edge out" and fiber upgrade will help future years.

• Free Cash Flow Yield is nearly 10%, and Free Cash Flow/Share will grow at double digits even with conservative assumptions.

• With shares at $28.81, we expect an exit price of $58 and a total return of 101% (22.8% annualized) by 2024 year-end. Buy.

Introduction

Altice USA, Inc. (ATUS) released Q2 2021 results after markets closed on July 28. Shares have since fallen 15.5%, including 8.4% the day after results.

We upgraded our rating on ATUS from Neutral to Buy in November 2020. ATUS stock has lost 4.4% since, when peers Charter and Comcast (both Buy-rated in our coverage) each gained double digits.

ATUS shares had been strong b…