Downgrade 7→6. Cox + Liberty M&A integration risk elevated over 12-18 months. Fiber overbuild accelerating broadband competition. Capital-heavy story in stagflation + Risk-Off regime doesn't earn top-tier positioning. Entry target $200 still valid but reduced urgency.
Charter Communications: DCF P(above)=100%, FV=$987 vs target $550. Both DCF and prior target imply massive upside from current price (~$300-350). Cable/broadband faces real competitive pressure from fiber overbuilding and wireless substitution, but free cash flow generation and buybacks at depressed prices create optionality. Upgrade to 7: compelling valuation signal but execution risk on OANN fiber build is the missing element.
Fair Value Distribution — percentile bands
100.0% of simulations place fair value above current price
WHAT IS PRICED IN
FCF-Based Reverse DCF
17.4%/yr
±3.1% · FCF growth to justify current price
KEY VALUE DRIVERS
Spearman correlation — what moves this valuation most
Cox + Liberty Broadband integration creates the largest US cable operator with unmatched fiber scale, driving ARPU expansion and cost synergies. Fiber penetration runway massive — 55% of footprint yet to upgrade. FCF re-acceleration post-CapEx peak.
M&A integration risk is real (B combined deal complexity). Video subscriber decline accelerates beyond model. Leverage 4.8x constrains optionality if execution stumbles. Interest rate sensitivity on refi.
Cox/Liberty merger blocked or collapses; video churn >30% in any quarter; leverage rises above 5.5x
Updated Mar 16
Video decline offset by Internet/mobile growth. Fiber network evolution on track. Large M&A deals pending with elevated debt but strategic rationale clear.