In a report released today, David Barden from Bank of America Securities maintained a Sell rating on Uniti Group (UNIT – Research Report), with a price target of $3.50.
David Barden has given his Sell rating due to a combination of factors affecting Uniti Group’s performance and outlook. One of the primary concerns is the structural challenges within the wireline business, exacerbated by a tightening in enterprise spending due to higher interest rates and inflationary pressures. Despite looking forward to management’s commentary on the sales funnel and wholesale opportunities for Uniti’s fiber business, Barden remains cautious due to the sector’s challenging dynamics, potential dividend risk, and the company’s overall leverage profile.
Another factor contributing to the Sell rating is the uncertainty surrounding Uniti Group’s financial strategies, including its capital allocation priorities and dividend sustainability. Although the company has restructured its balance sheet, its uses of cash—particularly for fiber deployment capital expenditures, interest expenses, and dividend payments—pose a risk. Barden highlights the possibility that the Board might cut the dividend to prioritize other financial obligations and to reach a positive cash flow target by 2025. This consideration, coupled with the company’s flat adjusted EBITDA growth and negative free cash flow, underpins the cautious stance on Uniti Group’s medium-term financial health.
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Uniti Group (UNIT) Company Description:
Uniti Group, Inc. is a real estate investment trust company, which is engaged in the acquisition and construction of mission infrastructure in the communications industry. It operates through the following business segments: Leasing, Fiber Infrastructure, Towers, Consumer CLEC, and Corporate. The Leasing segment represents the real estate investment trust operations of the company and includes the results from leasing business, Uniti leasing, which engages in the acquisition of mission-critical communications assets and leasing them to anchor customers on either and exclusive or shared-tenant basis. The Fiber Infrastructure segment refers to the operations of the fiber business of the company, Uniti Fiber, which provides infrastructure solutions, including cell site backhaul and dark fiber, to the telecommunications industry. The Towers segment encompasses Uniti Towers, which acquires and construct tower-related real estate in the United States and Latin America. The Consumer CLEC segment is the operations of Talk America, which provides local telephone, high-speed internet and long distance services to customers in the eastern and central United States. The Corporate segment is consist of corporate and back office functions of the company. The company was founded in February 2014 and is headquartered in Little Rock, AR.
Read More on UNIT:
- Uniti Group Inc. Declares $0.15 Per Share Quarterly Dividend
- UNIT Upcoming Earnings Report: What to Expect?
- Uniti Group announces completion of ABS bridge facility, asset sales
- Uniti Group Inc. Announces Completion of New ABS Bridge Facility and Recent Asset Sales
- Uniti Group Inc. To Report Fourth Quarter and Full Year 2023 Financial Results and Host Conference Call
