Our 12-month target price of $260 for American Tower is based on the average of the following methodologies:       
Our DCF incorporates revenue scaling to $13.6 billion by 2030, and an OIBDA margin expansion to ~70%. We derive a WACC of 7% using a target debt-to-total capital ratio of 30%, cost of equity of 8%, and beta of 0.75x to arrive at an operating enterprise value of $169 billion, which is adjusted modestly to get a total firm value of $160 billion. We then subtract year-end 2025E net debt of $34 billion to derive an equity value of roughly $126 billion, or $267 per fully diluted share.  
 
We adjust American Tower's 2025E normalized cash tower gross profit of $7.5 billion to remove deferred revenue amortization of $0.1 billion. We then apply a 22x EV/TGP multiple on our estimate of $7.4 billion. We then adjust AMT's total firm value to remove net-debt and sale-leasebacks and minority options to get a revised equity value of $119 billion. We expect a cash TGP CAGR of ~5.8% between 2025-2028, yielding a value of around $253 per share.        
We adjust our 2025E AFFOPS of $10.53 to remove deferred revenue amortization of $0.22 for an expected 2025E AFFOPS of $10.32. We then apply a 25x multiple on our 2025 AFFOPS estimate, which yields a valuation of around $258 per share.

Risk to our thesis and target price on American Tower include: high leverage, significant exposure to spending by wireless operators, rising interest rates, emerging market currency fluctuations, and above-average share price volatility. However, we believe the company's recurring revenue model with significant operating leverage and high incremental margins create a less volatile business model with relatively high predictability.

Tower industry risks include: revenue and profitability is subject to the capital and maintenance budgets of wireless telecom carriers and broadcast providers. Investment risks include: Wireless consolidation within the US remains a key risk for all tower companies over the long term, as American Tower relies on a small number of customers for a significant portion of its revenues and high financial leverage creates sensitivity to any rapid rise in interest rates. Risks to valuation include unexpected shifts in investor sentiment and/or substantially higher treasury rates.

If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty reaching our target price. Conversely, the stock could outperform our target price to the extent AMT further accelerates site leasing growth and/or its AFFOPS growth for the broader portfolio. The impacts from COVID-19 are difficult to estimate and could have a dilutive impact on site leasing growth and valuation from a range of factors, including cost of capital, labor constraints, capital availability, and market liquidity that could negatively impact the stock price as well as our target price.