Altice USA, Inc. (ATUS - Free Report) recently augmented its market position as a pioneer in the advertising business with the launch of a4 — an advanced advertising tool — to provide audience-based, multiscreen advertising solutions for its clients. With this, the company has successfully implemented its strategic plan to strengthen footprint in digital advertising through multiple acquisitions and investments.
From being the first MVPD (multichannel video programming distributor) partner to offer addressable advertising solutions in the New York DMA, Altice has evolved as a leading player in this segment and has subsequently created a niche market for itself. This was achieved through the acquisitions of Cablevision in 2015, followed by Audience Partners, a leading provider of authenticated IP addressability technology, and Placemedia, a premier provider of programmatic ad solutions for OTT and on-demand television.
With the successful integration of these businesses with Cablevision’s advertising and data business, Altice has brought to the fore unique skill sets for advertisers to identify the target audience across screens and local and national TV. They can then create an effective media plan, execute the buy and measure cross-screen reach, frequency and attribution to measure the efficacy of the program.
Leveraging the superior reach of a4, advertisers can reportedly extend their content to more than 90 million households, 85% of broadband subscribers and 1 billion devices in the United States. This would significantly benefit advertisers to screen their advertising messages to target pool of audience, thereby reducing operating costs.
Altice is on track with its five-year plan to build a fiber-to-the-home network and deploy its new home communications hub. The company believes the FTTH (Fiber to the home) network will be more resilient with reduced maintenance requirements, fewer service outages and lower power usage, which is likely to lead to further cost efficiencies. This network should allow Altice to satisfy demand for increasing speeds and support evolving technologies, such as the expected transition of mobile networks to 5G and enable it to capitalize on associated revenue-growth opportunities.
However, Altice has underperformed the industry with an average loss of 11.3% in the last three months compared with a decline of 7.9% for the latter. The company operates in a highly competitive industry against a variety of broadband, pay television and telephony providers and delivery systems, including broadband communications companies, wireless data and telephony providers, video signals, video content and broadcast television signals available to residential and business customers. Moreover, consumers’ selection of an alternate source of service, due to economic constraints, technological advances or preference, can curb demand for the company’s services. The company’s ability to increase the number of subscribers to its services is highly dependent on penetration rates.
Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the industry are Arista Networks, Inc. (ANET - Free Report) , Viavi Solutions Inc. (VIAV - Free Report) and Westell Technologies, Inc. (WSTL - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks has a long-term earnings growth expectation of 23%. It topped estimates in each of the trailing four quarters with an average positive earnings surprise of 25.3%.
Viavi Solutions has a long-term earnings growth expectation of 20%. It topped estimates in each of the trailing four quarters with an average positive earnings surprise of 41%.
Westell Technologies has topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 225%.
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