Charter Communications (NASDAQ:CHTR) was lifted to Overweight from Equal-Weight at Wells Fargo on Friday, with analysts raising the price target to $550 from $450 per share.
The analysts told investors in a note that they see mobile roll-to-pay, rural growth, and video contributing to the broadband connectivity company and cable operator's EBITDA acceleration.
Having previously been cable's biggest bears not so long ago, they said it's clear that subs will be better than feared. "The worst of cable is behind it, and CHTR is the clearest expression of the new normal," they wrote.
Focusing on Spectrum One roll-to-pay, the analysts wrote: "In Q4, CHTR begins converting ~235k free mobile subs per Q. We est. CHTR is targeting retention of ~75%, and this should add ~$100mm p.a. in rev/EBITDA or +50bps to EBITDA growth. It will also gradually improve b'band ARPU growth (which we increase for '24E).''
"We see roll-to-pay as the key debate, and if we're right, both ests. and valuation move higher."