Crown Castle Earnings: Soft 2024 Guidance Includes Current Weak Demand but Isn’t as Bad as It Looks

Crown Castle’s third-quarter results were generally in line with the slowdown in leasing activity seen in the U.S. recently, and the firm’s 2024 guidance implies a continuation of the trend into next year. However, the declines in sales and profits the firm projects in 2024 don’t account for the 2023 tailwinds that included significantly higher noncash revenue and a lump-sum payment from T-Mobile. Also, it appears small cell leasing, which we’ve long been disappointed in, is turning a corner. Weaker tower leasing and higher costs in 2024 and higher small cell capital spending assumptions lead us to reduce our fair value estimate from $137 to $130, but we think the stock is significantly undervalued.