Charter's Strong Network, New Bundles Drive Analyst Optimism For Long-Term Growth

Core Viewpoint - Charter Communications Inc. is positioned as a strong competitor in the cable industry, demonstrating resilience through improved cash flow and subscriber retention strategies despite facing challenges from competitors and market conditions [1][5]. Financial Performance - Charter's revenue increased by 0.4%, exceeding estimates by $70 million, while EBITDA rose by 5% with a 180 basis points expansion in EBITDA margins to 42%, surpassing expectations by 80 basis points [2]. - The company reported a normalized loss of approximately 150,000 subscribers in fiscal 2024, with improvements noted in broadband and video subscriber losses compared to the first quarter of 2024 [5]. Subscriber Dynamics - Charter's broadband subscriber losses improved to 55,000 from 72,000 in the previous quarter, while video subscribers declined by 167,000 compared to a larger loss of 392,000 in the first quarter [5]. - The company is offering promotional pricing for broadband at $40 per month, while the average revenue per user (ARPU) for residential broadband subscribers is $130, compared to Comcast's $170 [4]. Market Strategy - Charter's video offerings now include OTT packages priced at $80 per month, and the company is focusing on upselling additional services despite industry-wide pricing pressures [3]. - The company has resumed stock repurchases following the Liberty Broadband acquisition vote, indicating confidence in its financial position [5]. Future Outlook - Horan projects that Charter will achieve a free cash flow per share increase of four times by 2030, with a projected free cash flow yield of approximately 27% [6][7]. - The company plans to maintain a capital expenditure of around $12 billion for fiscal 2025, decreasing to $8 billion by 2028 [6].