This CHTR Stock Forecast article was written by Levi Fu – Financial Analyst at I Know First.

Highlights

• CHTR revenue reached $54.61 billion in 2023, driven by high-speed internet services, which accounted for 42% of total revenue.
• The 2016 acquisitions of Time Warner Cable and Bright House Networks created substantial synergies, enhancing Charter’s operational efficiency and strengthening its market position.
• Recent technical analysis using the Wyckoff method suggests a bullish outlook for CHTR, with a price target of $400 within 3 months, representing a 15% upside from the current level.

Overview

Charter Communications, Inc. (NASDAQ: CHTR) is the second-largest U.S. cable operator, serving over 32 million customers across 41 states under the Spectrum brand. It offers high-speed internet, TV, mobile, and voice services, with internet driving 42% of its 2023 revenue. Charter also provides business solutions through Spectrum Business® and Spectrum Enterprise®, along with tailored advertising via Spectrum Reach® and news and sports through Spectrum Networks.

CHTR overall financial trends for the past 5 years

Over the past five years, Charter Communications has seen a big jump in its Net Income, which is mainly due to company’s smart cost management. From 2019 to 2023, the company’s Net Income grew from $1.67 billion to $4.56 billion, which is an impressive annual growth rate of about 27.2%. This strong increase in profits is mainly due to significant cuts in Selling, SG&A expenses and Depreciation & Amortization (D&A) costs.

SG&A expenses margin dropped dramatically from 6.8% in 2019 to just 0.4% in 2023. Charter has been very effective in cutting costs is one reason. However, the primary reason of this dramatic drop is due to the previous M&A with Time Warner Cable and Bright House Networks in 2016.

Depreciation & Amortization expenses margin also going from 21.7% in 2019 to 15.9% in 2023, which is due to the completion of amortization schedules for intangible assets acquired by previous TWC and BHN acquisitions.

CHTR Segment Performance of 5-year period

CHTR has shown notable performance across business segments over the past 5 year period, and the company has shown the ability to respond to shits in consumer behaviors, particularly the growing need for high speed internet and decline in traditional services is crucial to its success. 

High-Speed Internet

High-speed internet is the backbone of Charter’s business. From 2019 to 2023, the number of internet subscribers steadily increased, driven by the growing demand for reliable broadband, especially as more people work and study from home. Revenue from this segment grew from $43.63 billion in 2018 to $54.61 billion in 2023, making it the biggest contributor to the company’s overall revenue. This consistent demand has not only fueled growth but also helped Charter keep its pricing competitive and its service quality high.

Video Services

Charter’s video services segment remains important but has faced challenges due to the shift towards streaming platforms. As more consumers move away from traditional cable to digital streaming, this segment’s contribution to total revenue has been under pressure. Despite these challenges, Charter has managed to keep a solid base of video subscribers. However, future growth in this area may require new strategies, like bundling video with internet services or offering more appealing content.

Voice Services

Voice services have become less important over the years, contributing just 3% to total revenue by 2023. As people increasingly switch from landlines to mobile and internet-based calling options, the demand for traditional voice services has dropped. Consequently, Charter has scaled back its focus on this segment, which now plays a smaller role in the company’s overall growth strategy.

Wireless Services

Wireless services are an emerging growth area for Charter. By 2023, the number of wireless subscribers had reached 7.8 million. Although this segment accounted for only 4% of total revenue, it has significant potential for expansion. Charter’s Spectrum Mobile® service uses the company’s existing infrastructure to offer competitive mobile plans, which could become a bigger revenue source as the company continues to invest in and expand its wireless offerings.

Small and Medium Business (SMB) and Enterprise Segments

The SMB and enterprise segments are key parts of Charter’s strategy, contributing 8% and 5% to total revenue in 2023, respectively. These segments are attractive because they offer higher profit margins compared to residential services and face less competition. Charter’s Spectrum Business® and Spectrum Enterprise® services provide customized solutions for a range of customers, from small businesses to large enterprises and government agencies. Focusing on these segments helps Charter diversify its revenue and reduce reliance on residential customers.

Advertising and Other Revenue

Advertising, led by Spectrum Reach®, contributed 3% to total revenue in 2023. While it’s a smaller part of the business, advertising is valuable due to its high margins and the ability to use customer data for targeted marketing. Other revenue streams, like equipment rental and additional services, made up 5% of total revenue, adding extra stability and variety to Charter’s income.

The Synergy and competitive advantage created by M&As

Charter Communications’ strategic acquisitions, particularly of Time Warner Cable (TWC) and Bright House Networks (BHN) in 2016, have significantly boosted its market position and operational capabilities. These acquisitions, totaling nearly $89 billion, expanded Charter’s subscriber base and provided substantial synergies through the consolidation of networks and resources.

The integration of TWC and BHN allowed Charter to leverage economies of scale, reducing operating expenses and improving service efficiency. The consolidation of infrastructure enabled more effective investments in technological upgrades, such as the all-digital implementation completed in 2019, which enhanced service quality across its expanded network.

Charter’s increased scale has strengthened its bargaining power in content and technology deals, allowing for better terms than smaller competitors might achieve. The acquisition of Cablevision’s Optimum West and other smaller systems further solidified Charter’s regional presence. Additionally, the collaboration with Comcast to explore wireless business opportunities and the launch of Spectrum Mobile in 2018 diversified Charter’s offerings, creating a new revenue stream.

CHTR Stock Forecast: Potential competitive risk lurking ahead

Charter Communications faces several significant risks in the coming years due to intense competition in its markets. The company competes directly with satellite TV providers like DirecTV and DISH Network, and large telecom companies such as Verizon and AT&T, which are aggressively rolling out fiber-based video and broadband services. This head-to-head competition puts pressure on Charter to continuously improve its offerings to maintain its market share.

Additionally, the rise of over-the-top (OTT) streaming services like Netflix, Hulu, and new entrants like Disney+ and Apple TV+ poses a serious threat to Charter’s traditional pay-TV business. As more consumers cut the cord and switch to streaming, Charter risks losing subscribers, which could impact its revenue and profitability.

CHTR Forecast: Technical analysis

The recent technical analysis of CHTR stock, using the Wyckoff method, supports a strong buy recommendation. Over the past six months, the stock has formed a “cup and handle” pattern—a bullish indicator. This formation is reinforced by the appearance of breakaway gaps on February 2nd and July 26th, closely resembling an island reversal pattern, which signals a potential upward trend.

Examining the reversal pattern, the left half shows a series of red bearish candlesticks with high volumes, driven by panic selling after the earnings release on February 2nd. In contrast, the right half features more green bullish candlesticks with increased volumes, indicating a phase of accumulation as investor confidence returns.

Notably, the exhaustion gap from February 2nd has been overlapped by the breakaway gap on July 6th. This overlap, combined with the island reversal pattern, suggests that the previous resistance level created by the February 2nd gap has now become a strong support level. This support was successfully tested by a hammer candlestick on August 22nd. As of September 3rd, the price has stabilized above the dip created by this hammer, confirming a successful secondary test and signaling a strong buying opportunity.

Given the previous high of $400 and the stock’s historical consolidation period of 3-6 months, a price target of $400 within the next three months is reasonable. This represents a potential 15% upside from current levels, making CHTR a compelling buy at this time.

CHTR Forecast: Analysts’ Consensus

Most analysts are optimistic on CHTR, according to yahoo finance. The forecasting price range is spread between $210 and $660 price per share, representing conservative and optimistic case respectively. The middle price is $365.93.

Conclusion

I recommend a buy on Charter Communications (CHTR) as the technical analysis, using the Wyckoff method, suggests a 15% upside potential with a target price of $400. Charter’s strong growth in high-speed internet, coupled with the synergies from its strategic acquisitions, positions the company well for continued market leadership and financial strength.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the CHTR stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success with CHTR Stock Forecast

I Know First has been bullish on the CHTR stock forecast in the past. On Jul 9^th, 2024 the I Know First algorithm issued a forecast for CHTR stock price and recommended CHTR as one of the best telecom stocks to buy. The AI-driven CHTR stock prediction was successful on a 1-month time horizon, resulting in more than 25.42%.

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Please note-for trading decisions use the most recent forecast.