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SBA Communications Corp SBAC

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Same Story for SBA Following Q3: Leasing Activity Is Strong; Results Are Good; Stock’s Too Expensive

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

SBA reported another good quarter and repeated what its tower peers said regarding the strength of U.S. tower leasing activity. However, also like peers, SBA hasn’t returned to the organic growth levels of 2-3 years ago and is trading at historically high valuation multiples. We expect SBA’s growth to remain strong, but we don’t expect it to eclipse organic growth rates from 2018-19 even when the recent leasing activity hits revenue next year. Nothing the firm reported in the quarter materially changes our outlook. We are maintaining our $200 fair value estimate and see the stock as materially overvalued.

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Company Profile

Business Description

SBA Communications owns and operates roughly 33,000 cell towers throughout North America, South America, and Africa. It leases space on its towers to wireless service providers, who install equipment on the towers to support their wireless networks. The company has a very concentrated customer base, with most revenue in each market being generated by just the top few mobile carriers. The company owns more than 16,000 towers in the U.S., which accounted for three fourths of the company’s total revenue in 2020. Internationally, SBA’s greatest presence is in Brazil, where it operates roughly 10,000 towers. SBA operates as a real estate investment trust, or REIT.

8051 Congress Avenue
Boca Raton, FL, 33487
T +1 561 995-7670
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 1,483