Q2 Results Show Continuing Strength in SBA’s Business and a Further Increase in Foreign Exposure

SBA Communications had another strong quarter and continued to convey significant optimism for the U.S. tower activity, saying its backlog for new leases has never been stronger. It also continued growing its international presence through acquisition, this time with the announcement of a significant tower acquisition in Brazil, already its biggest international market. Despite the enthusiasm, organic growth in the U.S. during the quarter was materially lower than the rates regularly achieved a few years ago. Given the firm’s bigger size and the type of spectrum (midband) now being deployed, we don’t expect similar growth rates to return. We expect SBA to continue performing very well, but we think the stock is overvalued relative to our new $250 fair value estimate (a $5 increase).