Charter Shares Remain Attractive Despite Weak Q2 Broadband Customer Numbers

Charter followed peer Comcast in reporting weak broadband customer metrics for the second quarter, pointing to the same underlying causes: modest consumer switching, the return of normalized seasonal patterns, and increased competition for new customers from fixed-wireless providers. Amid this backdrop, the firm delivered solid financial results, increasing revenue nicely, expanding margins, delivering strong cash flow, and repurchasing shares aggressively. We believe the market has severely overreacted to slowing broadband customer growth, making Charter stock attractive relative to our $610 fair value estimate.