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Analyst Blog

We reiterate our long-term Neutral recommendation on American Tower Corp. (AMT - Analyst Report), as we believe the stock is currently fairly valued. The company reported strong financial results for the third quarter of 2012 as earnings per share easily beat the Zacks Consensus Estimate. The top line also witnessed significant upside due to higher demand for wireless broadband data services coupled with American Tower’s global expansion strategy.

American Tower continues its strong performance driven by substantial demand for tower space to facilitate high-speed wireless data and on demand video services, along with super-fast 3G/4G technologies. Massive demand for wireless data and video throughout the world will boost American Tower’s long-term growth. Nevertheless, the stock has soared nearly 32% in the last year and is currently trading at the high-end of the 52-week price range, which may restrict the above market gain anytime soon.

Mobile subscribers’ growth has significantly boosted the wireless tower industry. Moreover, future financials are likely to be propelled by strong demand for wireless voice, broadband wireless data and video networks, which require more tower space. Deployments of 3G mobile networks promulgate requirements to expand coverage and infrastructure by carriers. Next-generation 4G LTE networks  with the increased usage of smartphones and tablets will also create impressive demand for tower leasing.

Verizon Wireless started deploying LTE from the end of 2010. Verizon Wireless is a joint venture between Verizon Communications Inc. (VZ - Analyst Report) and Vodafone Group plc. (VOD - Analyst Report).  AT&T Inc. (T - Analyst Report) started deploying LTE from mid-2011. Moreover, the Multi level Agreement (MLA) for 9 years signed with Sprint Nextel Corp. (S - Analyst Report) will further boost American Tower’s top-line growth going forward.

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