6. Uniti Group Inc. (NASDAQ:UNIT)
Average Analyst Share Price Target Upside: 58%
Average Analyst Share Price Target: $5.80
Number of Hedge Fund Investors in Q1 2024: 19
Uniti Group Inc. (NASDAQ:UNIT) is a real estate investment trust headquartered in Arkansas. The firm builds and operates communications infrastructure, including fiber networks, which are key for high end data centers, particularly for AI related use cases. Since it’s a fiber connectivity company, Uniti Group Inc. (NASDAQ:UNIT) sits right at the heart of a little known but massive shift taking place in America right now. This is the shift from old copper wires, weighing as much as 800,000 tons to new fiber optic networks which provide Uniti Group Inc. (NASDAQ:UNIT) the ability to profit from new initiatives such as direct to home fiber passing through its properties. However, headwinds in the form of slow telecommunications and consumer spending in the case of an economic downturn persist especially since Uniti Group Inc. (NASDAQ:UNIT) operates primarily in the communications real estate market.
Uniti Group Inc. (NASDAQ:UNIT)’s management shared its thoughts on the shift to fiber during the Q2 2024 earnings call:
“Yes, so as you mentioned, and as Kenny mentioned earlier, this is a fully funded business plan to get us through the combined company plan and cashflow inflection to cashflow positive in 2026. And really, the pieces of that are really just executing on both companies’ plans as they have in place today. Continuing to, at Kinetic, continuing to drive fiber deeper into that business, replacing copper, and hitting those marks and hitting the penetration goals for the fiber product, fiber to the home product at Kinetic is going to be key. Doing that at a cost that’s as projected, and that’s been going really well, as Kenny mentioned, the cost per passing at Kinetic is coming in at $650 per home, which we think is an industry-leading number.
And so continuing to execute on that capital plan, bringing fiber to those homes, and then achieving the penetration rates that Kinetic is showing good progress toward achieving. And then at fiber infrastructure, it’s really continuing to execute on just what we’ve been talking about, lowering capital intensity, delivering more and more lease up higher return type deals. But investment levels in that fiber infrastructure business are relatively consistent with what they are today. And then also for that Windstream business, continuing to drive efficiencies, drive TDM costs out of that business, which is a big part of their plan over the next couple of years, and they’re making great progress with regard to doing that. We saw some nice efficiency gains in their costs this quarter, and the results that were just published today in our 8-K saw some good efficiency gains in that business, so continuing to drive that through.”
