Altice USA Inc. dropped the most on record, triggering a brief trading halt, after its earnings report highlighted continued subscriber losses for its cable and broadband services.
(Bloomberg) — Altice USA Inc. dropped the most on record, triggering a brief trading halt, after its earnings report highlighted continued subscriber losses for its cable and broadband services.
Shares of the company plunged as much as 37% on Thursday. While the stock has seen strong reactions to earnings updates in the past, Thursday’s move is set to be the biggest decline in a session following its results.
At least 10 brokerages including Morgan Stanley and Goldman Sachs Group Inc. have cut their price target — or prediction for the firm’s stock 12 months from now — on the stock, bringing its average target down by 20%, according to Bloomberg data.
“We’re worried the path forward is painful: broadband subscriber losses are likely to continue, EBITDA declines will likely flow into 2023,” KeyBanc Capital Markets Inc. analyst Brandon Nispel wrote in a note.
The firm’s indebtedness also caught the eye of analysts. It reported consolidated net debt of $24 billion at the end of the quarter.
“As interest rates have risen, cable stocks have fallen. And the most levered have fallen the fastest,” said Craig Moffett analyst at MoffettNathanson. “Altice USA is the most levered.”
Altice USA, which spun out of Europe’s Altice NV in 2018, is one of the largest broadband and video services providers in the US. It serves more than 5 million residential and business customers across 21 states through its Optimum brand, according to its website.
“Fiber will better position ATUS,” Nispel said. “The better positioning is likely several years out and in the near term, only strategic alternatives such as divesting assets, which seems unlikely, are able to improve the stock performance.”
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