Bernstein Downgrades Charter (CHTR) to Market Perform on Valuation

On June 2, Bernstein analyst Laurent Yoon downgraded Charter Communications Inc. (NASDAQ:CHTR) from Outperform to Market Perform, while also raising the price target to $410 from $385. The downgrade is driven by the stock’s strong run, which has seen it rise nearly 40% over the past year and 15% year-to-date, outperforming the broader market.

Despite the gains, Yoon sees mixed prospects ahead. He points to ongoing broadband subscriber losses, which have continued for nine straight quarters, as a key challenge. Charter has also lagged behind competitors in rolling out fiber and fixed wireless access (FWA), raising concerns about its ability to regain subscriber growth.

A technician setting up a tower to improve the city’s broadband coverage.

Looking forward, the company’s capital spending is expected to peak in 2025, with free cash flow likely to improve starting in 2026, supporting its leveraged share buyback strategy.

That said, there are a few more positives in the current environment. Subscriber losses appear to be slowing, and mobile ARPU is improving, particularly for Spectrum Mobile. A possible deal with Cox could bring scale and cost benefits, but Yoon does not see it as an immediate solution for its bigger challenges.

Overall, the revised price target reflects improving profitability trends, especially in mobile; however, Yoon believes the risk-reward has become more balanced and thus justifies his shift to a neutral stance.

Charter Communications Inc. (NASDAQ:CHTR) is a leading broadband connectivity company and cable operator, with services available to more than 57 million homes and businesses in 41 states in the United States through its Spectrum brand.

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Disclosure: None.