SBA Communications Corporation (SBAC), headquartered in Boca Raton, Florida, owns and operates wireless communications infrastructure including towers, buildings, rooftops, distributed antenna systems (DAS) and small cells. Valued at $24.4 billion by market cap, the company offers site leasing and development, construction, and consulting services. SBAC leases antenna space on its multi-tenant towers to a variety of wireless service providers under long-term lease contracts.
Shares of this leading independent owner and operator of wireless communications infrastructure have considerably underperformed the broader market over the past year. SBAC has declined 3.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 31.8%. In 2024, SBAC stock is down 9.9%, compared to the SPX’s 25.8% rise on a YTD basis.
Narrowing the focus, SBAC’s underperformance is apparent compared to the iShares U.S. Digital Infrastructure and Real Estate ETF (IDGT). The exchange-traded fund has gained about 38.8% over the past year. Moreover, the ETF’s 26.2% gains on a YTD basis outshine the stock’s single-digit losses over the same time frame.
On Oct. 28, SBAC shares closed down marginally after reporting its Q3 results. Its AFFO of $3.32 matched analysts’ expectations. The company’s revenue was $667.6 million, missing Wall Street forecasts of $669 million. SBAC expects full-year AFFO in the range of $13.20 to $13.45, and expects revenue to be between $2.66 billion and $2.68 billion.
For the current fiscal year, ending in December, analysts expect SBAC’s FFO to decline 4.7% to $12.56 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 18 analysts covering SBAC stock, the consensus is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, two “Moderate Buys,” and six “Holds.”
The configuration is consistent over the past three months.
On Nov. 18, Barclays PLC (BCS) analyst Brendan Lynch kept an “Overweight” rating and raised the price target on SBAC to $257, implying a potential upside of 12.5% from current levels.
The mean price target of $258.18 represents a 13% premium to SBAC’s current price levels. The Street-high price target of $300 suggests an ambitious upside potential of 31.3%.
