Altice USA: Navigating High Leverage and Competitive Challenges with Strategic Shifts

Morgan Stanley analyst Benjamin Swinburne maintained a Hold rating on Altice Usa (ATUS – Research Report) on May 9 and set a price target of $2.00.

Benjamin Swinburne has given his Hold rating due to a combination of factors affecting Altice USA’s current and future performance. The company is navigating within the constraints of its capital structure, opting for a more cost-efficient hybrid fiber-coax strategy instead of its previous fiber build plans. Although there is improved visibility into 2025 with new guidance, the limited free cash flow generation and high leverage create a wide range of potential equity outcomes.
Altice USA’s first-quarter results for 2025 showed some positive trends, such as an increase in broadband ARPU and the lowest quarterly churn in three years. However, the company faces significant competitive challenges, especially in the West, where income-constrained households are more prevalent. The company’s strategic shift to a ‘hyper-local’ pricing strategy is a positive move, but the high leverage ratio of 7.6x and ongoing EBITDA declines remain significant barriers to creating equity value.

In another report released on May 9, Barclays also maintained a Hold rating on the stock with a $3.00 price target.