Crown Castle cut at Argus as wireless equipment demand to stay sluggish

Argus analyst Marie Ferguson downgraded Crown Castle (NYSE:CCI) stock to Hold from Buy on Friday as demand for wireless communication equipment is expected to stay sluggish through next year.

"We expect the shares to continue to reflect sector rotation due to high interest rates and slower growth as industry-wide demand for wireless communications equipment remains sluggish," she wrote in a note to clients.

And, though she sees the telecom tower REIT benefiting "over time from the increased demand for 5G wireless communications, meaningful growth in sales for cell phones is unlikely before 2025."

What's more, while the company added last year 8K new small cell antennae nodes, "this segment is not projected to drive earnings enough to overcome struggling tower performance," the analyst added.

On Wednesday, the company turned in better-than-expected earnings, revenue and adjusted EBITDA in the first quarter of 2024, even as the metrics fell sequentially and from 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 edged down 0.3% in Friday morning trading.