RBC Capital Reduces PT on Charter Communications (CHTR) Stock

Charter Communications, Inc. (NASDAQ:CHTR) is one of the Best 52-Week Low Blue Chip Stocks to Buy Now. On July 28, RBC Capital reduced the price objective on the company’s stock to $370 from $430, while keeping a “Sector Perform” rating, as reported by The Fly. As per the firm’s analyst, Charter Communications, Inc. (NASDAQ:CHTR)’s Q2 2025 EBITDA and broadband subscriber results were below estimates, while its FCF benefited due to the timing of cash taxes and lower capex. Furthermore, the firm added that it now anticipates poorer visibility in the subscriber trends and the probability of lower market share over the long term in competition against fiber and FWA providers.

However, Charter Communications, Inc. (NASDAQ:CHTR) expects that its strategic investments in network evolution and convergence, rural build, US-based service, and seamless entertainment innovation will ramp up future customer and revenue growth. In Q2 2025, the total video customers fell by 80,000 as compared to a fall of 408,000 in Q2 2024. The improvement was because of new and simplified pricing and packaging launched in September 2024. However, early benefits stemming from the inclusion of programmers’ streaming applications in Spectrum’s expanded basic packages also contributed.

Burke Wealth Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Charter Communications, Inc. (NASDAQ:CHTR): Charter was a long-time holding for us that we sold in the first quarter of 2024 due to the uncertainty caused by the expiration of the Affordable Connectivity Program (ACP). ACP was a program in which the government paid broadband providers a $30 monthly stipend to connect low income consumers who qualified for the subsidy. This program was put in place during Covid in an effort to keep people connected who were suddenly forced to work or learn from home. I don’t know whether it is more surprising that the program was still in place in early 2024 given that the pandemic has been over for several years or whether the ACP proved to be the one government subsidy that failed to attain permanent status. Either way, the ACP was allowed to expire in May and that meant that the broadband providers had to transition customers who had been receiving the subsidy into paying plans. For Comcast, this equated to ~1.4M customers on a base of 30M which meant that the practical impact of the ACP expiration was little more than the expiration of a major promotion. For Charter, which had over 5M of its roughly 30M subscribers receiving the subsidy, the risks were much greater. Further complicating matters is the fact that Charter targets a debt to EBITDA ratio in the 4.0x-4.5x range as part of its levered equity strategy. This is a great way to boost the returns of a business that targets EBITDA growth in the mid-single-digits but things can get dicey in a hurry should EBITDA begin to contract. Given the uncertainty surrounding the need to wean almost 20% of the subscriber base off of a subsidy that had been in place for several years, we concluded that the risk profile of Charter was no longer one that we could tolerate. When discussing the sale in our Q1-24 Investor Letter, we noted that we would continue to monitor Charter for repurchase should the ACP controversy resolve in an acceptable manner…” (Click here to read the full text)

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Disclosure: None. This article is originally published at Insider Monkey.