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Crown Castle (CCI) Raised to Strong Buy on Solid Prospects

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On Sep 26, Crown Castle International Corp. (CCI - Free Report) has been upgraded to a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CrownCastle has an extensive tower portfolio, strong business outlook, healthy leasing activity and is also witnessing high demand for the tower infrastructure and mobile broadband. These bullish factors are likely to propel growth for the company going forward.

Wireless Demand Strong

Wireless services are gaining rapid momentum, courtesy of additional features and capabilities. Much of the infrastructure and upgrades require effective site management of cell towers and equipment. Crown Castle effectively addresses this opportunity as over 90% of its quarterly revenues come from wireless service providers like Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) and T-Mobile US Inc. (TMUS - Free Report) . Additionally, wireless consumer demand is expected to increase considerably over the next several years which should bolster the company’s top line going forward.

Small Cell Investment

Last year, Crown Castle completed the acquisition of Sunesys – a major fiber service provider with a portfolio comprising around 10,000 miles of fiber. We believe that the Sunesys acquisition should further strengthen Crown Castle’s leading position in small cell networks.

Internet of Things, 5G

As wireless network providers work toward making 5G network services a reality, the deployment of the network will drive growth for both the company’s tower and small cell assets. This is because wireless carriers are constantly looking to expand networks to provide coverage, capacity and speed to support mobile video, the Internet of Things (IoT) services and fixed wireless broadband. Notably, IoT is touted as the next big thing in the technology space and higher investment by wireless carriers will rake in more revenues in the days ahead.

Potential Headwinds

High customer concentration is a major drag for Crown Castle. Notably, four big wireless service providers account for majority of the company’s revenues. Further, evolution of new technologies like Voice over WiFi may reduce demand for site leases.

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