Bernstein downgrades Charter as competition limits earnings growth

Investing.com -- Bernstein lowered its rating on Charter Communications Inc to Market-perform, saying tougher competition from wireless and fiber providers will weigh on profit growth despite stable cash generation.

The firm said Charter faces mounting pressure as fixed wireless access services from AT&T and T-Mobile continue to add customers, while fiber expansion by telecom rivals accelerates.

These trends will force cable operators to give up market share for several years, Bernstein said.

While Charter’s free cash flow story remains intact, the brokerage said weaker subscriber trends and slower revenue growth make it harder for the company to expand earnings.

It now expects 2025 EBITDA to decline slightly and 2026 to be flat to marginally higher, compared with earlier expectations of steady growth.

Bernstein said Charter’s wireless business is also seeing early signs of higher churn, as the company cannot match the heavy device promotions offered by mobile carriers with their own networks. That limits Charter’s ability to use its mobile service to retain broadband customers.

The firm cut its price target to $280 from $350, citing higher broadband losses, slower pricing growth, and increased marketing expenses to defend market share.

It said the company’s long-term cash generation and capital return plans remain sound, but will likely not be enough to offset weaker near-term fundamentals.

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