Citigroup raises its rating on SBA Communications (NASDAQ: SBAC) from Neutral to Buy and increases its price target from $53 to $60 as it believes the company's valuation is discounted in light of recent transactions.
Citigroup notes, "We revisited our AFFO analysis for SBA to reflect its recent Mobilitie acquisition, share issuance, & its improving cash interest cost. We now estimate pro forma AFFO of around $3/shr for 2012 & PF growth of 19% during 2013 to $3.57/shr. We are upgrading SBAC from Neutral to Buy with a revised target price of $60, based on: 1) our upwardly revised outlook for AFFO that should be supported by upcoming disclosures; 2) an attractive valuation with a P/AFFO for SBA of ~14x, which represents a 16% discount to the avg. of CCI & AMT at ~17x on our 2013 estimates; & 3) multiple expansion should be supported by favorable revenue & cash flow growth vs. its peers."
SBAC closed at $50.47 on Friday.
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