Crown Castle downgraded to Hold from Buy at Jefferies

Jefferies analyst Jonathan Petersen downgraded Crown Castle (CCI) to Hold from Buy with a price target of $84, down from $127. The sale of the company’s fiber business is unlikely to be a positive catalyst for the shares, the analyst tells investors in a research note. The firm believes the sale is less likely to be at an attractive multiple, “if it sells at all.” Press reports of valuations in the $8B-$10B range are disappointing, as they imply a 6-8 times EBITDA multiple, which would drive “material earnings dilution,” contends Jefferies. Further, it estimates a sale would likely necessitate a 15%-25% cut in the dividend to maintain a healthy payout ratio, and might be even more if the board decides to prioritize retained cash flow.