American Tower - Is the 5G Boom Continuing?
02 Agosto 2021 - 12:01PM
Finscreener.org
American Tower (NYSE:
AMT) owns and operates more than 180,000 cell towers in the
United States, Asia, Latin America, Europe, and the Middle East. It
leases space on its towers to wireless service providers who
install equipment on them to support their wireless networks. It is
also worth noting that REIT is a real estate investment fund.
AMTU+02019s main clients are AT&T (NYSE: T) ,
T-Mobile (NASDAQ: TMUS)
, Verizon Wireless (NYSE: VZ)
, etc.
American Tower owns leased telecommunications property. The
companyU+02019s revenue is divided into 2 main segments - rent and
services.
The rent depends on many factors, but it works on the terms of a
long-term contract. About 57% of all income comes from the United
States and Canada, 10% each from Latin America, Asia, and Africa.
The least involved region is Europe.
There are few competitors in the US market - Crown Castle or SBA
Communications. AMT itself looks stable and works efficiently. It
must be said that the company has a high level of debt, but at the
same time its cash flow is stable, which allows it to expand
through acquisitions of other companies.
Since AMT is a REIT, most of the profits must be distributed to
shareholders in the form of dividends. Dividend payments are
growing from year to year. It should be noted that the company has
historically increased its dividends not annually, but quarterly.
Since the company has made many acquisitions lately, we do not rule
out a slowdown in dividend growth in the next couple of years. The
growth rate of dividends over the past 5 years is 19.22.
Technicals
Since last August, AMT has been in a downtrend, the bottom of
which was found in early March 2021. Since then, the quotes have
had a strong uptrend. On the technical side, the RSI indicator on
different timeframes reports overheating of securities, for
example, on the weekly timeframe, the RSI value is at 68.02.
The range of $ 285-290 at the moment looks like a resistance
zone, from which a local correction may begin. The main driver may
be the price drop below $ 275, which is a support zone when
analyzing pivot points on the weekly timeframe. If that happens,
this scenario will pave the way for levels below $ 270.
According to Finscreener, the analyst consensus forecast for the
target price is 288.58, which represents 1.97% potential (as of
Friday 07/30/2021). Based on 13 analyst recommendations, 8 of which
recommend "Strong Buy".
Since the beginning of the year, the price of AMT shares has
grown by about 25%, and over the past 12 months - by 11%.
According to the rating of the Finscreener website, the company
received 2 stars out of five.
Pros:
AMT, due to its position, can set and regulate rental prices as
it sees fit.
The demand for communications and the Internet is growing from
year to year, and the demand for wider and better coverage is
growing accordingly.
Perhaps the most positive moment is the development and
implementation of communication generation - 5G, which is actively
developing in the United States and beyond.
In the future, it is also possible to consider the possibility
of territorial expansion. Particularly relevant are those areas
where the cost of tower installations is significantly cheaper than
in the United States. An additional driver is the proliferation of
cheap 5G smartphones.
Cons:
Decrease in the number of customers due to active
competition.
Reduced investment in tower expansion or acquisition of other
companies.
Government regulation and antitrust proceedings, especially with
international expansion.
Conclusion
AMT is a good asset, especially now that a market correction is
expected as the company has a low beta. It is still dangerous to
open positions now, as there is a high probability of a downward
movement due to overheating of securities or the economy as a
whole.
AMT shares can be viewed primarily as a defensive asset and a
dividend chip. The long-term outlook looks moderately positive with
the expansion and acceleration of the transition to 5G.
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