Shares of American Tower AMT have risen 11.8% over the past three months, against the industry's fall of 0.4%.

American Tower owns an extensive, geographically diversified communication real estate portfolio. With wireless carriers increasing capital expenditure due to rising wireless penetration, accelerated 5G network deployment efforts and spectrum auctions, demand is likely to stay strong.

Moreover, the long-term leases with its tenants assure stable cash flows. Its continued efforts toward macro-tower investments to expand its global footprint and address the demand in these markets bode well for long-term growth. A decent financial position supports its growth endeavors. However, customer concentration and consolidation are a concern in the wireless industry.

Last month, AMT reported first-quarter 2025 adjusted funds from operations (AFFO) of $2.75 per share, which beat the Zacks Consensus Estimate of $2.60. Results reflected a year-over-year rise in revenues, aided by revenue growth across its property and service operations segment.Zacks Investment Research

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Factors Behind AMT Stock Price Surge: Will the Trend Last?

The advancement in mobile technology, such as 4G and 5G, and the proliferation of bandwidth-intensive applications propel growth in mobile data usage globally. Amid this, wireless service providers and carriers have been deploying additional equipment for existing networks to enhance network coverage and capacity. Given its portfolio of nearly 149,000 communication sites worldwide and a highly interconnected footprint of U.S. data center facilities, American Tower is strategically positioned to capture incremental demand.

American Tower has a resilient and stable business model that provides a safe harbor. The company generates most of its revenues from non-cancellable, long-term (typically five to 10 years) tower leases with major wireless carriers with multiple renewal period options. In addition, American Tower provides on-site maintenance and servicing of antennas, amplifiers and base station equipment. The revenues generated from leasing and managing such networks are substantial and recurring.

American Tower has a solid track record of delivering healthy performance due to the robust demand for its global tower-oriented asset base. In the first quarter of 2025, the company recorded healthy year-over-year organic tenant billings growth of 4.7% and total tenant billings growth of 5.2%. Amid secular growth trends in the wireless industry, the healthy performance is expected to continue in 2025 and beyond.

Story Continues

American Tower has a robust operating platform and ample liquidity to support its debt servicing. The company's net leverage ratio as of March 31, 2025, was 5.0. As of March 31, 2025, AMT had $11.7 billion in total liquidity. With a weighted average remaining term of debt of 5.7 years, it has decent financial flexibility. As of the end of the first quarter of 2025, it enjoyed the investment-grade credit ratings of BBB and Baa3 and a stable outlook from Standard & Poor’s and Moody’s, respectively, enabling the company to borrow at a favorable rate.

American Tower has a disciplined capital distribution strategy and remains committed to increasing shareholder value through regular dividend hikes. It has increased its dividend 15 times, with an annualized dividend growth rate of 9.07% over the past five years. Backed by robust operating fundamentals, we expect the company’s dividend distribution to be sustainable in the upcoming period.

Analysts seem bullish on this Zacks Rank #3 (Hold) stock, with the Zacks Consensus Estimate for its 2025 AFFO being revised 1.1% northward to $10.14 over the past month.

Key Risks for AMT

High customer concentration and the ongoing consolidation in the wireless industry are likely to weigh on American Tower’s top-line growth. Elevated interest expenses and Sprint churn remain concerns.

Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties VICI and CareTrust REIT CTRE, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has moved upward marginally to $2.34 over the past month.

The consensus estimate for CareTrust REIT’s 2025 FFO per share has increased 1.1% northward to $1.79 over the past week.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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American Tower Corporation (AMT):Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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