Altice USA stock climbs 10% amid sale prospects of Suddenlink assets

Altice USA (NYSE:ATUS) shares jumped 10% pre-market on Thursday after the cable television provider reported second quarter results and confirmed talks surrounding the sale of its Suddenlink assets.

Late Wednesday, the New York-based firm reported a mixed set of results, with GAAP earnings per share of $0.23 falling short of Wall Street estimates. Net income attributable to stockholders fell from $197.7M in Q2/2021 to $106.2M.

Total revenue also fell 2.1% Y/Y to $2.46B, but managed to surpass analyst estimates. The company attributed the drop in revenue to residential business which declined 3%. Residential broadband customer net losses came to $40,000 for the quarter. Business Services revenue of $371.5M was flat at -0.1% Y/Y, while News and Advertising revenue grew 1.1% Y/Y to $133.3M.

Q2 adjusted EBITDA also fell 8% Y/Y with a 40.9% margin, reflecting both the revenue decline and higher OpEx to drive future growth.

The company reiterated its FY22 capex guidance at ~$1.7B to $1.8B as it expects to continue accelerating investments in key growth initiatives.

In the earnings call, CEO Dexter Goei responded to talks around a possible sale of its Suddenlink assets, noting that “Altice USA received a lot of inquiries from potential buyers for all or parts of Suddenlink. I think we could confirm there is a process going on. I don’t think we want to comment any further than that.”

Cowen analysts remarked that the mixed results were “trumped” by management’s confirmation of an active process for the sale of Suddenlink, with the broker noting that there could be a sale in the near-term. There could be meaningful upside for the stock with solid execution of strategy; however, with poor execution, Cowen sees the company being taken private for a win/win for the patient investor.

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