Crown Castle stock price analysis as Elliot ups pressure on the REIT

Crown Castle (NYSE: CCI) stock price will be in the spotlight on Monday as investors react to the additional pressure by Elliot Management, one of the leading activist investors in the world. Shares of the REIT company were trading at $105 on Friday, about 21% above the lowest point this year.

Elliot Management pressure on CCI

Crown Castle is one of the biggest REITs in the United States with a total market cap of over $48 billion. The company provides cellphone towers to big telecom companies in the US like AT&T, T-Mobile, and Verizon.

In addition to these towers, Crown Castle also owns thousands of miles of fibre cables that help millions of Americans and companies connect to the internet. 

Recently, however, Crown Castle has not done well. Its stock price has dropped by 20% in 2023, underperforming its peer companies like American Tower and SBA Communications that have dropped by 3.50% and 15%, respectively. 

Crown Castle stock price has also crashed by over 46% from its highest point during the pandemic. This happened as interest rates in the US roared back and reached the highest point in over 20 years. 5G investments have also normalised in the past few months.

The biggest Crown Castle news is that Elliot Management, which is run by Paul Singer has upped its stake in the company. After buying a stake worth about $1 billion a few months ago, the fund has increased it to $2 billion.

According to the WSJ, Elliot is calling for a major shakeup in the company, especially in its fibre business. The fund believes that the company should instead focus on higher-return industries like leasing cell towers.

The most recent results showed that Crown Castle was not doing well. Its site rental revenues came in at over $1.57 billion, up from $1.568 billion in the same quarter in 2022. Adjusted EBITDA fell to $1.047 billion while its AFFO fell to $767 million. 

The company also lowered its forward guidance, citing its restructuring charges. It will also not receive the $165 million Sprint cancellation funds that it received this year. In all, its rental revenue for 2024 will be down by about $140 million.

There are some positives for Crown Castle stock. The company has a forward dividend yield of about 6%, which is higher than the S&P 500 average. There is a likelihood that it will return to growth in 2024.

Crown Castle stock price forecast

CCI chart by TradingView

The daily chart shows that the CCI share price has staged a comeback in the past few weeks. This rebound happened after the stock formed a falling wedge pattern. In price action analysis, this pattern is one of the most bullish signs. 

The stock has jumped above the 50-day and 100-day Exponential Moving Averages (EMA) while the Relative Strength Index (RSI) has moved to the overbought point of 70. Therefore, the outlook for the Crown Castle stock price is bullish, with the next reference point to watch being at $116.26, the highest point in July.

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