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SBA Communications Corp SBAC

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Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Management’s Optimism Abounds Following Solid Q1 for SBA, but It’s Already in Our Forecast

Matthew Dolgin, CFA Equity Analyst

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.

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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.

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

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