Wells Fargo analyst Steven Cahall has recently upgraded his rating on Charter Communications (ticker: CHTR), a cable company, citing potential growth opportunities, particularly in rural areas. With this upgrade, Cahall has also increased his price target for Charter to $550 from $450, representing a possible 23% upside from the stock's previous closing price.
Cahall highlights Charter's expansion into rural areas as a significant factor in its potential for gaining new customers. In a second-quarter earnings call, Charter's Chief Executive Christopher Winfrey stated that the company is currently the largest and fastest-growing rural provider in the nation.
The company's Chief Financial Officer Jessica Fischer also commented on the call that their rural construction initiative is now spending more consistently throughout the year, which is a departure from its historical spending patterns.
The addition of new accounts is crucial for Charter, as it reported a loss of 200,000 pay TV customers in the second quarter. However, Winfrey mentioned that Charter had the smallest decrease in video customers compared to other market competitors.
Cahall is optimistic about Charter's Spectrum One bundle offering, which was launched in October 2022 and includes a free mobile line for customers. He believes that if Charter can achieve successful conversion rates for Spectrum One, it will generate high-margin revenue that will boost EBITDA. This conversion is seen as a significant catalyst by investors, and Cahall expresses confidence in Charter's execution.
As of Friday, Charter Communications' stock rose by 0.6% to $449.53. Year-to-date, the stock has experienced a 33% increase.
