Analyst Note| Matthew Dolgin, CFA |
Crown Castle management continued its optimistic tone on its third-quarter call, again highlighting record tower activity and small-cell bookings so far this year. But while tower financial performance remains strong, it hasn’t reached levels of a few years ago, and it will remain below those levels in 2022, based on the firm’s guidance. The strong small-cell bookings are misleading, considering that they come almost exclusively from a single contract booked in January, and new small-cell revenue will be anemic in 2022. We remain very positive on the prospects for towers but skeptical of eventual small-cell success. With the quarter providing little reason to deviate from our expectations, we are maintaining our $110 fair value estimate and view the shares as overvalued.