On Tuesday, Citi reaffirmed its positive stance on IHS Holding (NYSE:IHS), maintaining a Buy rating and a $3.70 price target for the company's stock. IHS Holding reported first-quarter results for 2024, which presented a mix of outcomes. Revenue dropped by 31% compared to the same period the previous year, totaling $418 million.
This decline was primarily attributed to the devaluation of the Nigerian currency. Despite the currency challenges, the company's revenue managed to surpass both the consensus and Citi's own projections, thanks to a slightly increased site count and a slower pace of tenant growth.
The company's Adjusted EBITDA, however, decreased by 45% to $185 million, falling short of both consensus and Citi's expectations. On a positive note, IHS's underlying organic growth stood at 11.4% year-over-year, which is higher than Citi's estimate of 10.5% year-over-year, driven in part by stronger fiber contributions.
IHS also made public that it is actively continuing its strategic review process and is considering the divestiture of assets that could potentially yield proceeds between $0.5 billion and $1.0 billion. These funds would be allocated towards reducing the company's debt. Despite the mixed financial results, IHS has chosen to maintain its previously established guidance ranges.
Citi's analysis suggests that while the first-quarter results were acceptable, the greater potential for IHS lies in the progress that could emerge from its strategic review. The firm anticipates that the near-term performance of IHS's share price will be more significantly affected by the details and discussions that took place during the earnings call.
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