On Friday, CFRA made adjustments to the financial outlook for Cellnex Telecom, S.A. (CLNX:SM) (OTC: CLLNY), a leading European telecommunications infrastructure operator. The firm's analyst reduced the 12-month price target on the company's stock to EUR36.00, a decrease from the previous EUR40.00, while maintaining a Buy rating.
The analyst's decision to retain a Buy opinion on Cellnex shares, despite the lower target price, is influenced by the company's valuation relative to the sector. The new stock target price corresponds to a 2024 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio of 14 times.
This ratio, while high in comparison to the European telecommunications sector overall, remains at a discount to private equity transactions for telecom infrastructure assets, which typically range between 25 times and 30 times, and below American Towers' ratio of 18.5 times.
Cellnex's financial performance in the first quarter of 2024 was robust, with reported revenues of EUR946 million, marking a year-over-year organic growth of 7.5%. The company's EBITDA for the same period was EUR535 million, an increase from EUR490 million in the first quarter of 2023, attributed to revenue-boosting organic growth.
The company also demonstrated strong recurring levered free cash flow (RLFCF), which stood at EUR384 million in the first quarter of 2024, compared to EUR336 million during the same period in the previous year. These figures fall within Cellnex's guidance for 2024, which anticipates revenues ranging between EUR3,850 million and EUR3,950 million and EBITDA between EUR3,150 million and EUR3,250 million.
In a significant financial milestone, last month, S&P awarded Cellnex's debt an investment-grade rating, aligning with the company's strategic objectives. The analyst foresees continued organic growth for Cellnex throughout 2024, driven by enhanced utilization of its existing assets.
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