Charter: Q2 Internet Net Adds Above 2019, Multi-Year Growth Continuing (Preview)

Company Update (CHTR US) (Buy)

Summary

• Q2 2021 results showed how each of the key components in our investment case for Charter continues to progress.

• Structural growth in Internet revenues continued. Internet net adds were 400k customers in Q2 and 10% above pre-COVID 2019 in H1.

• Losses in Video remained small and steady, margin expanded again, and leverage plus buybacks accelerated FCF/share growth to 42%.

• Mobile doubled service revenues year-on-year and narrowed its losses. This will be a material profit generator in the future.

• With shares at $770.00, we expect an exit price of $1,247 and a total return of 62% (15.2% annualized) by 2024 year-end. Buy

Introduction

We review our investment case on Charter Communications, Inc. after Q2 2021 results were released on Friday (July 30).

We initiated our Buy rating on Charter stock in January 2020, and since then CHTR shares have gained 51%. Year-to-date, Charter has gained 16.5%, significantly ahead of telcos AT&T and Verizon.

Q2 2021 results showed Charter continuing on its mu…