Uniti Reports a Good Q2, but Existing Operations Can't Have an Impact on Its Stodgy Business

Uniti had a good second quarter, but in the context of its entire stodgy business, it isn’t overly meaningful, and we don’t believe the firm’s stock movement is much affected by quarterly results. We are not changing our $12 fair value estimate, and considering the stock’s decline since last quarter, we think the stock is undervalued at current levels. Nothing short of a big acquisition will be able to materially move the needle on Uniti’s slow-growing top line, which is dominated by the firm’s long-term and very predictable lease with Windstream. Management insinuated that the high-interest-rate environment will hinder potential opportunities for Uniti to acquire other assets, given the firm’s leverage profile.