This telecommunications company looks poised for wireless growth in the new year after a rocky 2023, according to MoffettNathanson. The firm named Charter Communications its top pick in the industry for the new year, citing the company’s attractive valuation and growth outlook. “We’ve covered the wireless growth story that underpins our bullishness, but we would add valuation to reasons for optimism,” said Craig Moffett, the firm’s senior managing director, in a Tuesday note to clients. “We believe it is important to view Charter’s through the lens of free cash flow yield before their investments in rural expansion,” he added, noting that shares look “compelling” when one views “rural builds” as M & A. The firm rates Charter as a buy and has a price target of $708 per share, suggesting roughly 84% upside from Monday’s close. Cable stocks underperformed for the better part of 2023 as interest rates rose and wireless subscriber growth eased, but they bounced back in the second half as hopes rose for easing pricing pressures. Charter shares are up about 13% this year. CHTR YTD mountain Charter shares in 2023 “The picture for Charter is much brighter,” Moffett said. “Charter’s broadband [average revenue per user] is the industry’s lowest, leaving them more room to grow.” While the current broadband growth rate looks pressured by the company’s first-year-free wireless Spectrum One offer, those headwinds should ease in the fourth quarter and into 2024. The lack of capacity constraints for cable wireless should also pose an advantage, he added. — CNBC’s Michael Bloom contributed reporting.
