Last Update 10 Dec 25

OPTU: Lightpath Reorganization Approval Will Drive Future Margin Expansion Over Time

Optimum Communications' analyst price target has been reduced by analysts to approximately $2.25 from prior levels near $3.50. This reflects tempered expectations, despite confidence that recent operational changes can gradually enhance margins and support long term profitability.

Analyst Commentary

Analyst commentary around Optimum Communications highlights a more cautious valuation framework following the recent price target cut, but also points to tangible operational and strategic levers that could support a recovery in fundamentals over time.

Bullish Takeaways

Bullish analysts point to the updated financial model post Q3 as incorporating more realistic assumptions, which they believe reduces downside risk and provides a clearer path for multiple expansion if execution improves.
Operational changes are expected to gradually enhance margins, supporting a thesis that profitability can inflect higher over the medium term even if top line growth remains modest.
Exposure to high quality fiber infrastructure, as seen in related assets that are benefiting from AI and data traffic demand, underpins the view that Optimum’s network remains strategically valuable and underappreciated in the current share price.
Regulatory approvals for related restructuring and financing transactions are seen as a positive sign for balance sheet flexibility, which could improve the company’s ability to fund growth and de-lever over time.

Bearish Takeaways

Bearish analysts view the reduced price target as evidence that prior growth and margin expectations were too optimistic, increasing concern that valuation may still not fully reflect execution risk.
There is skepticism that operational initiatives will translate into sustained margin expansion on the expected timeline, particularly in a competitive environment that may pressure pricing and subscriber trends.
Some remain cautious that the market continues to discount the value of fiber and related assets, implying that any sum-of-the-parts upside is contingent on clearer separation, monetization, or consistently stronger operating metrics.
Uncertainty around macro conditions and capital markets could limit the benefits of asset-backed or restructuring transactions, constraining the pace of deleveraging and weighing on equity valuation.

What's in the News

Optimum Communications has filed an antitrust lawsuit in federal court in New York, alleging that eight lenders, including Apollo Global and Ares Management, formed an illegal cartel in 2024 that blocked the company from repurchasing its own debt at market prices (Wall Street Journal).
Altice USA, Inc. will officially change its corporate name to Optimum Communications, Inc., formalizing the Optimum brand as the primary identity across operations (company announcement).
Altice USA will change its New York Stock Exchange ticker symbol from ATUS to OPTU, aligning its market identity with the new Optimum Communications name (company announcement).
Adeia Inc. has signed a long term intellectual property license agreement with Optimum, supporting advanced content discovery, search, and personalization features across Optimum’s internet, cable TV, and streaming platforms, and resolving all outstanding litigation between the companies (Adeia press release).

Valuation Changes

Fair Value: unchanged at approximately $2.40 per share, indicating no revision to the fundamental intrinsic value estimate.
Discount Rate: steady at 12.5%, suggesting no change in the assumed risk profile or cost of capital for Optimum Communications.
Revenue Growth: modestly improved from about -1.98% to -1.97%, still implying a slight expected revenue decline but with a marginally less negative trajectory.
Net Profit Margin: risen slightly from roughly 53.47% to 54.37%, reflecting incremental confidence in future profitability and operating efficiency.
Future P/E: decreased slightly from about 38.47x to 37.83x, signaling a small reduction in the valuation multiple applied to forward earnings expectations.

Expansion of fiber network and bundling of broadband, mobile, and value-added services are strengthening customer loyalty and driving revenue growth.
Operational efficiencies, digitalization, and capital structure improvements are boosting margins, cash flow, and financial flexibility for future investments.
Intensifying competition, declining video revenue, high debt, macro pressures, and rising operating costs threaten subscriber growth, pricing power, margins, and long-term financial flexibility.

Catalysts

About Altice USA

Provides broadband communications and video services under the Optimum brand in the United States, Canada, Puerto Rico, and the Virgin Islands.What are the underlying business or industry changes driving this perspective?

Ongoing expansion and upgrades of the fiber network are driving improvements in network quality, reliability, and customer experience, positioning Altice USA to benefit from increasing broadband adoption, higher average revenue per user (ARPU), and lower churn, supporting long-term revenue growth and enhanced margins.
Growing proliferation of connected home devices and streaming services is accelerating consumer demand for high-speed, high-capacity internet, favoring Altice USA's infrastructure investments and creating opportunities to upsell value-added services such as Whole-Home WiFi, Total Care, and higher broadband tiers, positively impacting ARPU and total revenues.
Bundling strategies that integrate broadband, mobile, and value-added services (including new mobile plans and business product suites) are increasing customer stickiness and multi-product penetration, reducing churn and stabilizing or growing earnings over time.
Continued operational efficiencies from digitalization, AI-driven automation (in customer care and network operations), and workforce optimization are projected to drive sustained improvement in EBITDA margins and stronger free cash flow in the medium to long term.
Asset-backed financing initiatives and improvements in capital structure (including the recent $1B securitized facility) expand financial flexibility and reduce average cost of debt versus previous issuances, supporting investment in growth areas and lowering long-term interest expense.

Altice USA Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Altice USA's revenue will decrease by 2.2% annually over the next 3 years.
Analysts are not forecasting that Altice USA will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Altice USA's profit margin will increase from -3.1% to the average US Media industry of 10.1% in 3 years.
If Altice USA's profit margin were to converge on the industry average, you could expect earnings to reach $830.8 million (and earnings per share of $1.7) by about September 2028, up from $-269.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 2.3x on those 2028 earnings, up from -4.2x today. This future PE is lower than the current PE for the US Media industry at 20.8x.
Analysts expect the number of shares outstanding to grow by 1.52% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Altice USA Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company continues to face strong competitive headwinds from both well-capitalized telcos, fiber overbuilders, and fixed wireless providers, which are impacting broadband gross additions; increased competition threatens long-term subscriber growth and pricing power, potentially leading to revenue and ARPU pressure.
Ongoing cord-cutting and the secular decline in traditional pay-TV subscriptions remain a key driver of year-over-year revenue declines (video accounts for 85% of total revenue decline), and although new video tiers are mitigating losses, the structural decline in video revenue is expected to persist, negatively affecting top-line growth and margins.
High leverage and a substantial debt load (leverage ratio of 7.8x adjusted EBITDA) paired with a heavy 2027–2028 maturity wall raise refinancing risks and could result in higher interest expenses; this threatens future net income, constrains financial flexibility, and may pressure earnings if credit markets tighten.
Macro-economic pressures such as low residential move activity and historically low new housing formation are limiting gross additions, and if these trends persist, they could further constrain subscriber growth and revenue visibility in the long run.
While operational efficiency and cost optimization initiatives-like workforce reductions, automation, and AI-are expected to support margins, persistent increases in other operating expenses (consulting fees, marketing, and health benefits) as well as ongoing transformation costs could offset margin gains and weigh on long-term EBITDA improvement.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $2.783 for Altice USA based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $5.5, and the most bearish reporting a price target of just $1.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.2 billion, earnings will come to $830.8 million, and it would be trading on a PE ratio of 2.3x, assuming you use a discount rate of 12.3%.
Given the current share price of $2.4, the analyst price target of $2.78 is 13.8% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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