SBAC: New Verizon Lease Agreement Will Support Future Revenue Amid Legal Uncertainty

Analysts have trimmed their price target for SBA Communications slightly lower, with a modest fair value reduction of about $0.40 to roughly $234.90. This reflects sector wide target cuts as they factor in legal and leasing uncertainties across the tower group, while still recognizing SBA's resilient fundamentals and improved visibility from recent agreements.

Analyst Commentary

Bullish analysts highlight that, despite a wave of target reductions across the tower group, SBA Communications is still viewed as a high quality, structurally advantaged tower operator with solid execution and attractive long term growth prospects. Several price targets remain comfortably above the current trading range, reflecting confidence in the company’s ability to drive AFFO growth and capitalize on improved leasing momentum.

At the same time, more cautious voices point to legal uncertainties, carrier churn and evolving competitive dynamics as reasons for a more measured valuation framework. Target cuts have generally been framed as a recalibration of risk and growth assumptions rather than a fundamental break in the long term thesis, but they underscore that execution and visibility will be closely scrutinized over the next several quarters.

Bullish Takeaways

Several research desks retain Buy or Overweight stances even after lowering targets, indicating that recent volatility is seen more as a valuation reset than a structural impairment to the long term growth story.
Analysts note that the newly signed master lease agreement with Verizon improves revenue visibility and supports expectations for continued colocation driven growth, which is viewed as a key underpinning for AFFO expansion.
Recent quarterly results, including modest EBITDA and AFFO beats and stronger than expected international performance, reinforce the view that SBA can execute above conservative forecasts, supporting premium valuation multiples versus peers.
Some bullish analysts argue that the market has overreacted to sector wide legal headlines, creating an opportunity to accumulate SBA at a discount to historical valuation levels while fundamentals remain intact.

Bearish Takeaways

Bearish analysts are tempering price targets to reflect heightened legal and contractual uncertainty in the broader tower ecosystem, which could weigh on sector multiples and compress upside for SBA in the near term.
Reduced leasing and AFFO estimates tied to churn from certain U.S. carriers and lower leasing expectations from satellite and wireless operators add risk to forward growth assumptions and justify more conservative valuation frameworks.
Questions around the long term impact of spectrum transactions and non traditional network architectures, including potential competitive pressure from low earth orbit satellite providers, are contributing to debate about structural growth durability for towers.
While domestic leasing trends have recently improved, some analysts caution that carrier spending plans remain fluid, and any renewed pullback in activity could pressure organic growth and limit multiple expansion even if fundamentals remain relatively resilient.

What's in the News

BMO Capital lowered its price target on SBA Communications to $210 from $215 while maintaining a Market Perform rating, citing a modest Q3 EBITDA and AFFO beat, stronger than expected international performance, and improved domestic leasing supported by a new master lease agreement with Verizon (BMO research note).
SBA Communications raised its full year 2025 revenue guidance to a range of $2.808 billion to $2.828 billion, along with higher net income guidance of $1.0665 billion to $1.1115 billion, reflecting improved visibility and confidence in operating performance (Corporate guidance update).
From July 1, 2025 to November 6, 2025, SBA repurchased 957,686 shares for $194.32 million, completing a total of 992,461 shares for $202.12 million under its April 28, 2025 buyback authorization, signaling continued capital return to shareholders (Buyback tranche update).

Valuation Changes

Fair Value: edged down slightly by about $0.40, from roughly $235.29 to $234.88. This reflects a modest recalibration rather than a major repricing.
Discount Rate: risen slightly from approximately 8.54 percent to 8.56 percent. This indicates a marginally higher required return for the equity.
Revenue Growth: effectively unchanged at around 2.89 percent, signaling stable top line growth expectations.
Net Profit Margin: essentially flat at roughly 31.54 percent, suggesting no material change in long term profitability assumptions.
Future P/E: ticked down modestly from about 32.34x to 32.30x, pointing to a slightly lower valuation multiple applied to forward earnings.

Rising demand for wireless connectivity and technology adoption is driving stable revenue growth from leasing, new leases, and international expansion.
Strategic divestitures and reinvestment are strengthening financial flexibility, supporting accretive growth and resilience against market and interest rate challenges.
Shifts toward satellite networks, carrier consolidation, high debt, limited international diversification, and intensifying competition all threaten future revenue growth and profitability.

Catalysts

About SBA Communications

A leading independent owner and operator of wireless communications infrastructure including towers, buildings, rooftops, distributed antenna systems (DAS) and small cells.What are the underlying business or industry changes driving this perspective?

Accelerating demand for wireless network densification-driven by growing 5G deployments, surging mobile data consumption, and widespread adoption of AI-intensive applications-is fueling a healthy backlog and increasing tower colocation activity, signaling a multi-year runway for stable to rising leasing revenue and organic growth.
The upcoming release and auctioning of new spectrum by the FCC, supported by favorable federal policy changes, will require carriers to upgrade equipment and expand infrastructure capacity, creating incremental opportunities for new leases, amendments, and construction services that should drive recurring revenue and service growth.
Expansion of SBA's portfolio in high-growth international markets (such as Central America via the Millicom acquisition), combined with inflation-linked, multi-year tenant contracts, is laying a foundation for diversified, predictable, and steadily escalating international revenues and net margins.
Completion of the Canadian tower divestiture at premium multiples and reinvestment of proceeds into debt reduction, share repurchases, or accretive international growth-while maintaining historically low leverage and investment grade credit-positions the company to enhance AFFO per share and navigate rising interest rate headwinds.
Strong secular tailwinds from the proliferation of connected devices and Internet of Things (IoT)-amplified by increased demand for fixed wireless access and new AI-enabled use cases-will structurally intensify the need for wireless infrastructure, supporting sustained long-term growth in SBA's tenancy rates and site leasing revenues.

SBA Communications Earnings and Revenue Growth

SBA Communications Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming SBA Communications's revenue will grow by 4.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 32.3% today to 33.0% in 3 years time.
Analysts expect earnings to reach $1.0 billion (and earnings per share of $9.77) by about September 2028, up from $878.7 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $702.1 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.8x on those 2028 earnings, up from 23.4x today. This future PE is greater than the current PE for the US Specialized REITs industry at 30.5x.
Analysts expect the number of shares outstanding to decline by 0.13% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.09%, as per the Simply Wall St company report.

SBA Communications Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The rise of low-Earth-orbit satellite networks (e.g., Starlink, EchoStar's LEO initiative) may provide an alternative to terrestrial towers in rural and hard-to-reach areas, potentially capping long-term core tower leasing revenue growth and impacting SBA's future revenue trajectory.
Ongoing industry consolidation among wireless carriers (e.g., Sprint/T-Mobile, U.S. Cellular sale), as highlighted by continuing carrier churn and specific revenue headwinds, increases bargaining power for tenants and pressures lease pricing, with risks of abrupt declines in revenue and cash flow if major tenants consolidate or rationalize their networks.
The company's debt levels remain significant ($12.6B total debt, 6.3x net debt/EBITDA), exposing SBA to earnings and margin pressures as low-cost debt matures and is replaced at higher interest rates, especially since management indicated several upcoming maturities are at one handle coupons versus current rates above 3.7%.
International diversification remains limited and exposes SBA to elevated risks in individual markets, as seen with increased churn and bad debt from specific customers like Oi in Brazil, which already triggered higher international churn (7.5%) and revenue loss, signaling ongoing vulnerability in regional exposures and potential constraints on top-line growth.
Highly competitive M&A and market dynamics-where private market buyers pay significantly higher multiples for tower assets (e.g., Canada asset sale at high-20s multiple)-could result in fewer attractive acquisition opportunities, limiting SBA's ability to bolster revenue externally and increasing reliance on organic growth, which could be constrained by secular shifts to alternative network architectures (small cells, DAS, direct carrier ownership), ultimately affecting future revenue and AFFO growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $256.294 for SBA Communications based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $285.0, and the most bearish reporting a price target of just $230.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.1 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 33.8x, assuming you use a discount rate of 8.1%.
Given the current share price of $191.47, the analyst price target of $256.29 is 25.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on SBA Communications?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

SBAC: Raised Guidance And Buyback Will Offset Near-Term Leasing Churn