Will Altice USA’s first-quarter earnings report provide relief for the “cable flu” that has overtaken Wall Street over the last four months?
No, emphatically says MoffettNathanson analyst Craig Moffett.
“Unfortunately, when Altice reports its first quarter results this week, we suspect their results will only add to the cable disquiet,” Moffett said in a note to investors this morning. “A rough-and-tumble programming dispute with Starz—the early part of the quarter saw heavy rotation of marketing messages from Verizon telling customers to switch—will likely have pressured subscriber metrics at legacy Cablevision. Later, Stars was added back … with a predictable programming cost step-up. And the return of Viacom (at Suddenlink) will, in a carryover from Q4, pressure margins at legacy Suddenlink.”
Altice reports first-quarter earnings on Wednesday.
All cable stocks have plummeted in recent months, with investors concerned about cord cutting, a potentially saturated wireline broadband market and competition from 5G wireless service providers.
But no company has suffered like Altice USA, Moffett notes, which has seen its share price decline 44%.
Moffett, however, reiterated his “buy” rating for the cable operator.
“Yes, we’re still skeptical about Altice’s long-term growth prospects, particularly in their legacy Cablevision footprint,” he added. “But Altice USA’s discount is something close to Armageddon. We’d rather own cable stocks when they are out of favor (as they are now) than when they are every investors darling … as they were last August.”