Crown Castle Maintains Consistency in Q4; Towers Strong, Fiber Weaker but With Signs of Optimism

Fourth-quarter results told a familiar story for Crown Castle. The tower business remained strong and is seemingly running on autopilot. The fiber segment, which includes small cells, has not yet performed at a level commensurate with the huge amounts of capital the firm has invested in it. However, while we still don’t think the small-cell business will be nearly as attractive as towers, we’re more optimistic than we’ve been in recent years. Most concretely, we think Crown has moved beyond the point where fiber will be a drag on economic profits. We plan to raise our fair value estimate to $140 per share from $135, implying that the stock is fairly valued.