Uniti’s Steady and Plodding Business Persisted in Q4; Stock Is Too Beaten Up

Although Uniti’s revenue came in at the low end of its fourth-quarter guidance range, we believe anyone disappointed with fourth-quarter results or the 2023 outlook has unrealistic expectations. In our view, the results Uniti delivered and foreshadowed for 2023 are indicative of its potential considering so much of its business consists of its stable lease with Windstream. We maintain that bullish commentary about adding new leases to the firm’s fiber footprint will be insufficient to really move the needle. However, we also think the market has become overly bearish, and considering the financing transactions that Uniti announced, we think fears of default would be overblown. We’re maintaining our $12 fair value estimate but see Uniti as a high-risk stock.