Charter: Market Is Wrong To Panic After Investor Day
(Preview) Company Update (CHTR US) (Buy)
Summary
The main Charter Communications, Inc. news was a one-off increase in capital expenditures during 2023-25; we believe investors are wrong to panic on this.
One part of the increase is the Rural Constructive Initiative, much of which was known previously and generates a teens IRR.
The other part of the increase is a one-off upgrade cost, mostly in 2024-25, to enable 5Gbp+ downloads in 85% of the footprint.
We believe Charter is investing in long-term growth; telco Fixed Wireless is already slower, and their wireline broadband has little growth.
With shares at $333.18, FCF Yield exceeds 10% and we expect a total return of 181% (40.3% annualized) by 2025 year-end. Buy.
Introduction
Charter Communications, Inc. held their first investor day under new CEO Chris Winfrey after markets closed on Tuesday (December 13). Investor reaction has been negative, with shares down 15% as of 2:30 pm EST Wednesday.
We originally initiated our Buy rating on CHTR in January 2020. Since then, Charter’s share…