Charter Spending Peak Signals Higher Free Cash Flow After 2025, Analyst Says

Shares of Charter Communications Inc (NASDAQ:CHTR) were trading higher on Thursday, after declining by nearly 6% over the past five trading sessions.

The company's capex is set to peak in 2025, resulting in free cash flow growth, according to KeyBanc Capital Markets.

Analyst Brandon Nispel upgraded the rating for Charter Communications from Sector Weight to Overweight while establishing the price target at $500.

The Charter Communications Thesis: The company is likely to generate "modestly better underlying Broadband subscriber trends" in 2025, while Rural net adds are expected to accelerate, Nispel said in the upgrade note.

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Charter Communications is likely to report Broadband net adds of 29,000, significantly better than the consensus estimate of a decline of 69,000, he added.

Management guided to capex peaking in 2025 at $12 billion to $12.5 billion, then declining toward $8.0 billion in 2027 and 2028, "as its rural build and DOCSIS 4.0 upgrade are complete," the analyst stated. "We think regardless of what happens on the subscriber side, capex is set to move lower post ’25, and FCF is set to accelerate" and reach nearly $8.0 billion by 2027, he further wrote.

CHTR Price Action: Shares of Charter Communications were up 1.8% to $385.32 at the time of publication Thursday.

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