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2021-05-04

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J.P. Morgan's short-term look finds picks, pans in telecom/pay TV

J.P. Morgan's "Spectrum of Opportunity" note offers a chance to re-rank telecom and pay television s

J.P. Morgan's short-term look finds picks, pans in telecom/pay TV

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Morgan's short-term look finds picks, pans in telecom/pay TV","url":"https://stock-news.laohu8.com/highlight/detail?id=1143573807","media":"seeking alpha","summary":"J.P. Morgan's \"Spectrum of Opportunity\" note offers a chance to re-rank telecom and pay television s","content":"<ul><li>J.P. Morgan's \"Spectrum of Opportunity\" note offers a chance to re-rank telecom and pay television stocks for May performance -updating its longer-term ratings with the prospect of benefiting from shorter-term catalysts (including such things as seasonality).</li><li>And turning to its top picks for May yields several names worthy of some catalyst-based attention (based on a points system it assigns to sort out how to weigh alternatives).</li><li>One is Comcast(NASDAQ:CMCSA), which is likely to keep seeing strong cable trends along with re-opening data points for its parks and film operations. It likes the stock long-term relative to megacap peers AT&amp;T(NYSE:T)and Verizon(NYSE:VZ)\"due to strong fundamentals at cable and an improving backdrop at NBC/Sky.\" The broader market is concerned about growing broadband competition, but Comcast's trends are staying strong driven by acquisition and churn as it grows share.</li><li>Meanwhile, theme park demand is ramping, with open parks breaking even during the first quarter, and there's upside to NBC/consolidated EBITDA for 2021. It has a $62 price target.</li><li>On a slightly different time frame is T-Mobile (TMUS; reporting after the close tomorrow): It's the firm's best long-term idea (based on substantial operating efficiencies and cash flow growth for coming years), and while it's not looking for a big Q1 beat, it's still a short-term pick.</li><li>\"After a strong quarter by AT&amp;T but soft one from Verizon on postpaid phone adds, we see upside to our postpaid phone add estimate of 400K with consensus at 450K,\" J.P. Morgan says. It's not expecting guidance increases, but there's \"ample opportunity for growth in fixed wireless, enterprise and rural markets, and the company highlighted $60B of buyback potential from 2023-2025 (we model ~$40B over that time frame due to spectrum purchases).\"</li><li>Another highly rated short-term pick is Charter Communications(NASDAQ:CHTR). Itsfirst-quarter report showed solid broadband and customer relationship growth, and despite competition fears in broadband, Charter is well positioned to keep growing penetration \"driven by its market-growth strategy and new home builds - both greenfield and fill-ins.\"</li><li>It's staying a top idea across J.P. Morgan's coverage on further broadband share gains, ongoing EBITDA growth (margin expansion), strong capital returns and ramping free cash flow generation.</li><li>Turning to its least favorite names on the spectrum, there's Cable One(NYSE:CABO), where multiples are already very high compared to public peers. Preliminary results showed EBITDA strength, unsurprising due to residential momentum, operating efficiency and synergy realization. But it's struggling with a valuation of 16.8x 2022 enterprise value/EBITDA and a 3.2% free cash flow yield, vs. pure-play peers like Charter and Altice USA (ATUS; EV/EBITDA&nbsp;multiples of 10.8x and 8.6x respectively).</li><li>Another least-favorite is Gogo(NASDAQ:GOGO)- where it's modeling an entire convertible issue converting to equity, diluting existing shareholders. Total revenues are set to improve after bottoming in Q2 2020, but it's still \"wary\" as it sees a 5G network buildout pushed out to 2022, allowing for a competitor to come in. That and the potential dilution are set to weigh on the shares for the \"foreseeable future.\"</li><li>And another name in disfavor is Lumen Technologies(NYSE:LUMN), which saw a heavy run-up in January after being heavily shorted. That squeeze is \"unsustainable,\" J.P. Morgan says.&nbsp;And it's wary about the loss of subsidies for rural connectivity. \"We struggle to become positive on the name due to falling CAF/RDOF (Connect America Fund/Rural Digital Opportunity Fund) support in 2022, where Lumen will lose nearly all of its current ~$500m CAF revenue from 2021 to 2022, at ~100% EBITDA flow-thru.\"</li><li>Lumen is still spending to enable the homes it got in the CAF-II auction, but J.P. Morgan says capital expenditures should be shifted to other parts of the business rather than just going to free cash flow generation.</li></ul>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>J.P. 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Morgan's short-term look finds picks, pans in telecom/pay TV\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-04 14:12 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/news/3689866-jp-morgans-short-term-look-finds-picks-pans-in-telecompay-tv><strong>seeking alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>J.P. Morgan's \"Spectrum of Opportunity\" note offers a chance to re-rank telecom and pay television stocks for May performance -updating its longer-term ratings with the prospect of benefiting from ...</p>\n\n<a href=\"https://seekingalpha.com/news/3689866-jp-morgans-short-term-look-finds-picks-pans-in-telecompay-tv\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"https://seekingalpha.com/news/3689866-jp-morgans-short-term-look-finds-picks-pans-in-telecompay-tv","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1143573807","content_text":"J.P. Morgan's \"Spectrum of Opportunity\" note offers a chance to re-rank telecom and pay television stocks for May performance -updating its longer-term ratings with the prospect of benefiting from shorter-term catalysts (including such things as seasonality).And turning to its top picks for May yields several names worthy of some catalyst-based attention (based on a points system it assigns to sort out how to weigh alternatives).One is Comcast(NASDAQ:CMCSA), which is likely to keep seeing strong cable trends along with re-opening data points for its parks and film operations. It likes the stock long-term relative to megacap peers AT&T(NYSE:T)and Verizon(NYSE:VZ)\"due to strong fundamentals at cable and an improving backdrop at NBC/Sky.\" The broader market is concerned about growing broadband competition, but Comcast's trends are staying strong driven by acquisition and churn as it grows share.Meanwhile, theme park demand is ramping, with open parks breaking even during the first quarter, and there's upside to NBC/consolidated EBITDA for 2021. It has a $62 price target.On a slightly different time frame is T-Mobile (TMUS; reporting after the close tomorrow): It's the firm's best long-term idea (based on substantial operating efficiencies and cash flow growth for coming years), and while it's not looking for a big Q1 beat, it's still a short-term pick.\"After a strong quarter by AT&T but soft one from Verizon on postpaid phone adds, we see upside to our postpaid phone add estimate of 400K with consensus at 450K,\" J.P. Morgan says. It's not expecting guidance increases, but there's \"ample opportunity for growth in fixed wireless, enterprise and rural markets, and the company highlighted $60B of buyback potential from 2023-2025 (we model ~$40B over that time frame due to spectrum purchases).\"Another highly rated short-term pick is Charter Communications(NASDAQ:CHTR). Itsfirst-quarter report showed solid broadband and customer relationship growth, and despite competition fears in broadband, Charter is well positioned to keep growing penetration \"driven by its market-growth strategy and new home builds - both greenfield and fill-ins.\"It's staying a top idea across J.P. Morgan's coverage on further broadband share gains, ongoing EBITDA growth (margin expansion), strong capital returns and ramping free cash flow generation.Turning to its least favorite names on the spectrum, there's Cable One(NYSE:CABO), where multiples are already very high compared to public peers. Preliminary results showed EBITDA strength, unsurprising due to residential momentum, operating efficiency and synergy realization. But it's struggling with a valuation of 16.8x 2022 enterprise value/EBITDA and a 3.2% free cash flow yield, vs. pure-play peers like Charter and Altice USA (ATUS; EV/EBITDA multiples of 10.8x and 8.6x respectively).Another least-favorite is Gogo(NASDAQ:GOGO)- where it's modeling an entire convertible issue converting to equity, diluting existing shareholders. Total revenues are set to improve after bottoming in Q2 2020, but it's still \"wary\" as it sees a 5G network buildout pushed out to 2022, allowing for a competitor to come in. That and the potential dilution are set to weigh on the shares for the \"foreseeable future.\"And another name in disfavor is Lumen Technologies(NYSE:LUMN), which saw a heavy run-up in January after being heavily shorted. That squeeze is \"unsustainable,\" J.P. Morgan says. And it's wary about the loss of subsidies for rural connectivity. \"We struggle to become positive on the name due to falling CAF/RDOF (Connect America Fund/Rural Digital Opportunity Fund) support in 2022, where Lumen will lose nearly all of its current ~$500m CAF revenue from 2021 to 2022, at ~100% EBITDA flow-thru.\"Lumen is still spending to enable the homes it got in the CAF-II auction, but J.P. 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