Analyst Note| Matthew Dolgin, CFA |
SBA Communications’ first-quarter site leasing revenue and adjusted funds from operations, or AFFO, were in line with our full-year forecast, but they both beat Visible Alpha consensus first-quarter estimates. The firm also increased full-year guidance, though primarily due to a new lease agreement with Verizon that will result in more noncash revenue being recognized in 2021 than previously forecast, having no impact on cash flow or adjusted EBITDA. More important than the strong quarter, in our opinion, was management’s optimism about the current level of domestic site leasing activity and expectation of continued activity over the next year or two. Still, none of this commentary deviates materially from our expectations considering the new spectrum U.S. carriers have to deploy. We’re raising our fair value estimate to $195 from $190, and despite our expectation that business will remain very strong, we believe shares are overvalued.