Altice USA Inc

Altice USA Inc. (NYSE: ATUS) is a holding corporation. In the United States, the Company's subsidiary, Altice Europe, provides broadband communications and video services.

ATUS Details

Latest News

• On May 18, 2022, Optimum, an Altice USA brand, launched Optimum 5 Gig Fiber Internet, the fastest home fiber internet service in the New York Tri-State area, with symmetrical speeds up to 5 Gig, more than twice as fast as competitive fiber providers.
• According to the 2022 American Customer Satisfaction Index, Altice USA's Optimum Mobile was ranked first in customer satisfaction among full-service cellular carriers on May 17, 2022. (ACSI).
• Altice USA released its first-quarter results on April 28, 2022, for the period ending March 31, 2022.

Key Takeaways from Q1 FY22 financial results

• In Q1 2022, total revenue fell -2.3 % year over year to USD2.42 billion (-2.1 % excluding air strand revenue), with Residential revenue down -3.6 %, Business Services revenue up +0.1 % year over year (+1.5 % excluding air strand revenue), and News & Advertising revenue up +9.1 %.
• In Q1 2022, net income attributable to stockholders was USD196.6 million (USD0.43/share on a diluted basis), compared to USD274.1 million (USD0.58/share on a diluted basis) in Q1 2021.
• In Q1 2022, net cash flows from operating activities were USD600.2 million, compared to USD749.6 million in Q1 2021, while cash capital expenditures of USD392.4 million represented 16.2 % of revenue in Q1 2022, up 84.4 % year over year, primarily due to accelerated fiber ("FTTH") rollout and new builds.
• As of March 31, 2022, the company had cash and cash equivalents of USD 195.65 million and total debt of USD 26.44 billion.

Key Risk

• Supplier Concentration Risk: Because ATUS cable systems employ one or two distinct technological designs, it buys set-top boxes and other customer premise equipment from a small number of vendors. A vendor's breach of contract might put the company's operations in jeopardy.

Outlook

The Company plans to increase cash CAPEX from USD1.7 billion to USD1.8 billion in FY 2022, as it continues to accelerate investments in key growth areas.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

Source: REFINTIV, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation

Over the past nine months, ATUS's share price has corrected by 62.49%. The stock is currently leaning towards the lower end of its 52-week range of USD 8.67 to USD 35.55. The stock is currently trading below both short-term (50-day) SMA and long-term (200-day) SMA, and as can be seen in the chart below currently taking rejections from the short-term SMA. But we expect the price to gain momentum and break the SMAs after having consolidated for a good period. We have valued the stock using the EV/EBITDA multiple-based relative valuation method and arrived at a target price of USD 12.08. We believe the firm is selling at a discount to its peers but because of strong fundamentals, profitability, and operational efficiency, we predict the stock will rise soon.

Considering the strong fundamentals, technical analysis, associated risks, and current valuation, we give a "Hold" recommendation on the stock at the current price of USD 10.02 down 3.24%, as of June 10, 2022, at 12:35 PM PDT.

One Year Technical Chart, as of June 10, 2022, at 12:35 PM PDT. Data Source: REFINITIV, Analysis by Kalkine Group

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.