On Monday, Benchmark analyst adjusted the price target for shares of WideOpenWest (NYSE:WOW), a telecommunications company, to $7.50 from the previous $8.00 but maintained a Buy rating on the stock. The new price target is designed to align with the S&P 400 and incorporates a cost of equity for small to mid-cap companies into a disciplined discounted cash flow valuation.
The revised price target of $7.50 is notably higher than the $4.80 non-binding preliminary proposal from DigitalBridge Investments, LLC and Crestview, WideOpenWest's principal shareholder.
The analyst believes there is potential for further upside based on the company's edge out and greenfield performance. This optimism comes despite the challenges posed by the loss of broadband customers through the Affordable Connectivity Program (ACP).
The analyst also noted that as the headwinds from the ACP customer loss begin to dissipate, WideOpenWest is exploring funding alternatives to accelerate its greenfield expansion program. The company's efforts to expand could contribute to an increase in its value beyond the current preliminary offer.
However, the analyst cautioned that if a buyout does not materialize, there is a risk that WideOpenWest's stock price could fall below its current modest trading level. The lowered price target reflects a cautious but optimistic view of the company's future performance and valuation.
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