Our $3.25 target price for Altice is based on the average of the following methodologies:        
Our DCF analysis uses an average WACC of 7.8% and a consolidated terminal growth rate of 1.0% to arrive at an operating enterprise value estimate of roughly $24 billion at year-end 2025. This is adjusted for net debt and other adjustments for investments and NOLs to arrive at an equity value of around $1.4 billion or $3.03 per fully diluted share.   

    
We apply a 7.6x EV/EBITDA multiple on our 2025 EBITDA estimate of $3.1 billion (excluding Lightpath EBITDA of $269 million). We expect an EBITDA CAGR of 1.3% between 2025-2028, yielding a fair value of around $2.65 per share. 

     
We use a P/FCF multiple of 5.0x our 2025 Normalized FCF estimate of $0.79 to arrive at a value of $3.93 per share with forward 4-year CAGR estimated at 7% through 2025.  

We rate Altice USA shares High Risk given the recent share price volatility and elevated financial leverage.

Key risks to our target price and investment thesis for Altice USA include: 1) Altice USA is highly levered and may need to reduce debt leverage; 2) may have difficulty monetizing the remaining stake in LightPath and taking some or all of its assets private; 3) may require greater investments to stabilize or improve operating performance; 4) may need to pay higher interest expense and higher cash taxes over time; 5) experience faster video and legacy revenue erosion; 6) spend higher capex than expected; and 7) experience greater broadband competition. Impacts related to the potential for economic weakness and recession remain a risk to our financial forecasts and valuation multiples for the company as well as the sector.

If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price. Likewise, if any of these factors proves to have less of an effect than we anticipate, the stock could outperform our target.