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American Tower Corp AMT

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Morningstar’s Analysis

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Poor U.S Results and Foreign Exchange Headwinds Outweigh Int'l Strength for American Tower in 2Q

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Weakness in the United States and exchange rates that mitigated a strong international business led to disappointing top- and bottom-line results for American Tower. The firm also lowered its full-year outlook, though that was primarily due to factors independent of sales trends, including changes to straight-line and pass-through revenue assumptions and increases to bad debt reserves. We're modestly reducing our 2020 forecast to reflect the current environment, but we're not adjusting our long-term forecast, as our view has not changed about the amount of investment carriers must do in their networks. Moreover, after adjusting our cost of capital assumptions to better reflect American Tower’s relatively low borrowing costs, we are raising our fair value estimate to $190 from $175. We still see American Tower as overvalued, and this quarter’s results may temper tower sentiment that we’ve felt has been too euphoric.

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Company Profile

Business Description

American Tower owns and operates roughly 180,000 cell towers throughout the U.S., Asia, Latin America, Europe, and the Middle East. It leases space on its towers to wireless service providers, which 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 operates more than 40,000 towers in the U.S., which accounted for more than half of its total revenue in 2019. Outside the U.S., American Tower’s greatest presence is in India and Brazil, where it operates roughly 75,000 and 19,000 towers, respectively. American Tower operates as a real estate investment trust.

116 Huntington Avenue, 11th Floor
Boston, MA, 02116
T +1 617 375-7500
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 5,454