Charter: Mid-Single-Digit Underlying Growth; Likely Reacceleration in 2024

Company Update (CHTR US) (Buy)

We believe CHTR is significantly undervalued because of one-offs distorting its P&L and valuation.

Highlights

• Residential revenues are growing mid-single-digits ex. low-margin Video

• Underlying EBITDA growth is probably also mid-single-digits ex. one-offs

• FCF Yield is 4.1% after all CapEx, or 5.6% ex. high-split CapEx

• Likely re-acceleration in 2024; further upside if Fixed Wireless falters

• At $388.68, we see 69% upside (19.0% p.a.) by 2026 year-end. Buy

Introduction

We review the Charter Communications investment case again, having last written about the stock on September 4.

Charter stock gained 14.6% in 2023, but is still down 40.4% since 2021 year-end and less than half of its all-time high:

Charter Share Price (Last 5 Years)

Source: Google Finance (29-Dec-23).

We have maintained a Buy rating on Charter since we first published our research online in January 2020, and also included it as the #9 position in our “Select 15” model portfolio at its inception in January 2023. We removed Charter from…