SBA Communications Produces Another Good Quarter in an Environment That’s As Good as It Gets

SBA’s first-quarter sales exceeded FactSet consensus estimates, and the firm raised its full-year outlook. While the fundamentals were good, and management reiterated how strong the leasing environment is in the United States, the beat and raise were largely due to currency tailwinds, a benefit from higher inflation, timing of Sprint churn, and non-recurring site development revenue. None of these dynamics are indicative of better long-term prospects, but the near-term financial strength—which the new outlook implies will add about 250 basis points to 2022 sales growth—leads us to raise our fair value estimate to $245 from $240. We expect SBA’s good performance to continue in what we believe is an ideal environment, but we don’t expect its business to materially accelerate or return to growth levels achieved a few years ago.