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Argus analyst Marie Ferguson downgraded Crown Castle (NYSE:CCI) shares will be kept from buying on Friday as demand for wireless communications equipment is expected to remain weak throughout next year.
“We expect stocks to continue to reflect the expected sector rotation to high interest rates and slower growth as industry-wide demand for wireless communications equipment remains sluggish,” he wrote in a note to clients.
And, while he sees the telecommunications tower REIT benefiting “over time from increased demand for 5G wireless communications, significant growth in mobile phone sales is unlikely before 2025.”
Additionally, although the company added 8,000 new small cell antenna nodes last year, “this segment is not expected to generate sufficient earnings to overcome tower performance challenges,” the analyst added.
On Wednesday, the company reported better-than-expected earnings, revenue and adjusted EBITDA in the first quarter of 2024, although the metrics declined sequentially and compared to a year ago.
Ferguson’s Hold rating agrees with the SA Quant system rating and the average sell-side analyst rating, both at Hold, but diverges from the average SA analyst rating of Buy.
CCI board down 0.3% in Friday morning trading.