RBC Capital provided its key takeaways from Charter Communications, Inc. (NASDAQ:CHTR) Investor Meeting, which provided an attractive outlook for the company’s network evolution, footprint expansion, converged go-to-market strategy, and efforts around improving the customer experience.
The analysts said they are highly encouraged that the target cost to upgrade the network is only $100 per passing ($5.5 billion in total; multiples lower than feared just a few months ago) and that early rural builds have seen approximately 40% penetration after only six months.
That said, the impact to broadband subscriber growth and ARPU could take years to fully manifest, and in the meantime, this spend is driving a new CAPEX cycle through 2025 that will pressure free cash flow and buybacks.
The analysts walked away with their constructive longer-term outlook reaffirmed, though they are cautious on how the free cash flow cuts will be digested in this tape, and don’t expect shares to really rally until there’s a sustainable improvement in broadband sub trends or moderation in interest rates. The analysts reduced their price target to $460 from $480 while maintaining their Outperform rating.