Altice USA: Now A Turnaround Play With Low-Teens FCF Yield

(Preview) Company Update (ATUS US) (Buy)

Summary

• ATUS stock lost 12.7% on Thursday after negative management comments at a conference call the investment case into question.

• ATUS now expects 15-20k of broadband net losses in Q3, which is blamed on lower gross adds, while churn supposedly has not worsened.

• We believe ATUS's issues are company-specific and due to poor execution; it is now in a turnaround, and we think this will succeed.

• We have revised our forecasts significantly downwards, incorporating expectations of higher CapEx and lower buybacks.

• With shares at $22.06, we expect a total return of 59% (14.7% annualized) if the stock merely returns to its summer 2021 level. Buy.

Introduction

We review Altice USA after shares fell 12.7% on Thursday (September 23) following negative management comments at an investor conference.

We originally upgraded our rating on ATUS to Buy in November 2020. After a positive initial performance, ATUS stock started to correct in mid-2021, and have now fallen 26.8% below the price at our upgrade.

Ou…