Altice USA: 2021 Outlook Cut Again; Shares Near All-Time Low

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

Summary

• ATUS has again cut its 2021 outlook, and now expects broadband subscriber net losses for both Q4 and the full year.

• ATUS expects to see a low-single-digit decline in revenues and a mid-single-digit decline in EBITDA in 2022, and there will be no buybacks.

• Broadband losses are mainly in markets where ATUS overlaps with Verizon's Fios, but there will be more such fiber overbuild in the future.

• Turnaround initiatives are unlikely to produce tangible progress until H2 2022, if at all, though there has been some operational improvement.

• ATUS has a double-digit Free Cash Flow Yield, but its business challenges mean that its investment case is too speculative. Avoid.

Introduction

Altice USA, Inc. shares have fallen another 6.4% in the last two days (December 7-8). At $15.86, ATUS stock is now down 59% from its peak in May, and is close to its all-time low of $15.20 in October 2018.

We attribute ATUS' decline this week to CEO Dexter Goei's comments at the UBS Global TMT Conference on Tuesday…