Altice USA target lowered to $25 at Pivotal Research Group (18.52)
Pivotal Research Group lowers their ATUS tgt to $25 from $30. They forecast Altice will pay down additional debt with free cash flow taking leverage from the current 5.2X (net) to 3.3X by '20, even though realistically we would not be surprised to see capital return in the form of dividends over time. A 3Q crisis of confidence at Altice's parent company's French operations have driven a remarkable decline in Altice NV (on what they view as mainly a very poorly managed 3Q price increase) exacerbated by their leverage, which has in turn bled into ATUS shares (and to be fair partially reflecting temporary negative sentiment over the broader U.S. cable industry). They remind investors that France is arguably the most competitive market in the world (compared to a relatively benign U.S. market), Altice operations are ring fenced, France debt maturities are lengthy ‘22-'26 (giving them time to turn those operations around), and we believe in a worst-case scenario Altice could secure more than 4/5X EBITDA for the French assets (read there appears to be limited chance issues in France could materially affect the U.S. business).