Altice USA: Signs Of Stabilization In Q1, Still Too Speculative

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

Summary

• ATUS's Q1 results initially sent shares down 6.7%, before they rebounded 12.0%. Shares are still down 43% since our downgrade.

• ATUS may be stabilizing sequentially. Broadband net adds were negative, but revenues were up and the EBITDA decline seemed seasonal.

• ATUS believes it has improved its competitiveness against Verizon fiber, and observed little activity from Fixed Wireless in its markets.

• Free Cash Flow will decline substantially in 2022. The figure represents a 17% yield, indicative of the risks involved in the stock.

• ATUS has a weaker business model than peers and is too speculative. At $10.39, we believe the stock is to be avoided. Hold.

Introduction

Altice USA, Inc. reported Q1 2022 results after markets closed last Thursday (April 28). ATUS shares fell 6.7% the following day, but have rebounded 12.0% in the subsequent three trading days.

We downgraded our rating on ATUS from Buy to Hold in November 2021, after what we considered a broken investment case; since then ATUS sha…