Charter: Unfairly Punished In September Market Correction
(Preview) Company Update (CHTR US) (Buy)
Summary
Charter shares lost 24% during the September correction, we believe unfairly, and rebounded 9% in the first three days of October.
Shares are down 60% from their peak and are at a 10.5% tax-adjusted Free Cash Flow Yield, which should help limit further downside.
Recent comments by industry executives indicated that Q2 trends have continued. Charter and Altice USA are getting new CEOs.
We believe investors have become too fixated on broadband net adds, which is just one of several growth drivers for U.S. Cable.
With shares at $329.28, we expect an exit price of $1,000 and a total return of 204% (41% annualized) by 2025 year-end. Buy.
Introduction
We review Charter Communications Inc. after shares continued to be volatile, falling 24% in September and then rebounding 9% in the first three trading days of October.
Charter shares have now fallen 60% from their peak last September, a peak-to-trough decline that is twice as large as the approximately 30% corrections seen in February-March o…