Altice USA: 17% Bounce In Two Days Despite Weak Q3 Results

(Preview) Company Update (ATUS US) (Neutral)

Summary

• ATUS stock has rebounded 17% on Thursday and Friday, but is still down 71% in a year and carries a 20%+ Free Cash Flow Yield.

• However, we see the 29% collapse in ATUS shares on November 2 after Q3 results as the right reaction. The business is not getting better.

• Revenues fell 4.3% and EBIT fell 12.7% year-on-year in Q3. Broadband losses were worse than Q2, unlike at ATUS' larger Cable peers.

• ATUS's fiber roll-out is accelerating but not helping. Free Cash Flow was down two-thirds year-to-date and leverage has risen to 6.0x.

• The new CEO indicated no change in strategy. There was no update on the Suddenlink sale process. ATUS is too speculative. Avoid.

Introduction

Altice USA, Inc. stock has bounced back 17% in the last two days (November 10-11), after losing 29% on the day of its Q3 2022 results (November 2) two weeks ago. We see the rebound as the result of the broader rally after positive U.S. inflation data, with ATUS stock moving much more than the market because of its highly le…