Oppenheimer analyst Timothy Horan rated Charter Communications Inc. ( CHTR ) as Perform on Monday.

Charter is the nation’s second-largest cable provider. In terms of network quality and speeds, the company holds a major competitive advantage over wireline providers.

Also Read: Charter Loses Internet And TV Subscribers But Beats Rivals With Strong Mobile Line Gains

Horan noted its ability to generate consistently high cash flow from its businesses, which gives it added flexibility to adapt to industry trends despite its large size.

Charter’s revenue grew 0.4% versus Horan’s flat estimate, a $70 million beat. EBITDA was up 5% on a 180bps expansion in EBITDA margins to 42%, an 80bps beat, but it would have been in line with normalizing for a one-time $75 million other expense benefit.

Subscriber losses have improved off a very difficult 2024 due to the expiration of ACP and hurricanes Milton and Helene, and now improved bundled offers.

Its video offering now has OTT packages worth $80 per month bundled in and attractive promotional wireless/broadband prices which began in the fourth-quarter of 2024.

The analyst noted this as a negative for the overall industry, but price increases on the base continue to grow, and they are upselling many additional services.

The company’s introductory promotional pricing for broadband is $40 per month, but Horan estimates its base is paying $80 per month and can move to a wireless carrier for permanent pricing of $50. Positively, using a crude metric of revenue per residential broadband subscriber, Charter is at $130 per month versus Comcast Corp ( CMCSA ) at $170. Both are at $70 for broadband, reported ARPU.

Charter lost 55K broadband subscribers versus -72K in the first quarter of 2024, and Horan noted a normalized ACP total loss of ~150K in fiscal 2024. Video declined 167K versus -392K in the first quarter of 2024.

ACP is now behind the company, and new promos are helping; however, the analyst continues to see challenging competition with lower-priced fixed and mobile hotspot wireless, fiber and OTT video.

Charter has resumed stock repurchases after the Liberty Broadband acquisition vote.

Leverage has declined to 4.1x and will head to 4.25x gradually.

Positively, Horan does not expect Charter to grow EBITDA by ~2% per year. With stock buybacks and lower capex, free cash flow per share can increase 4x by 2030 to ~$100.

Charter reiterated its fiscal 2025 capex of ~$12 billion, declining to $8 billion in 2028.

Cash taxes of $1.6-2.0 billion, implying a ~15% Y/Y increase, but $1 billion of this in the second quarter.

Horan tweaked subscriber and financial estimates on the early effectiveness of the new go-to-market. The analyst reiterated that Charter looks attractive on a long-term free cash flow per-share basis following the completion of its network evolution in two years and major stock buybacks at a ~27% 2030 free cash flow yield.

Horan projected second-quarter revenue of $13.73 billion and EPS of $9.07.

CHTR Price Action: Charter Communications ( CHTR ) stock is up 0.97% to $377.29 at the last check on Monday.

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