Bonds Soared
Case Study: CommScope
CreditSights delivers with another successful recommendation providing remarkable returns:
109%
Since we Upgraded to a Buy Recommendation until August 2024
Overview
CommScope is a networking infrastructure equipment provider, primarily to North American and European customers.
2Q24 results provided additional proof points for a cyclical recovery, with margin improvement in CCS being a highlight for the quarter. CommScope now sees 2024 core EBITDA (excluding OWN & DAS) in the $700-$800 mn range; this is meaningfully above expectations as it implies consolidated 2024 EBITDA in excess of $1.0 bn vs. prior consensus of ~$730 mn.
Commentary on continued order improvement is encouraging. The recovery has not yet materialized in NICS or ANS, but we see these as potential sources of EBITDA improvement in 2H24 and into 2025.
Our sum-of-the-parts valuation has increased given higher forward EBITDA estimates and remains supportive of our recommendations; we now see consolidated enterprise value of ~$9.3 bn and core enterprise value of ~$7.1 bn.
Commscope LLC 8.25% bonds due 2027
(cents)
Aug 3: Company cuts CY23 guidance, we maintain Underperform recommendation.
Oct 13: We launch Special Situations coverage, and upgrade our recommendation to a Hold.
Mar 1: Company reports weak 4Q results, we reiterate our Sell recommendation.
May 10: With 8.25% Notes due 2028 at 38.5 cents, we upgrade to a Buy recommendation.
Dec 4: We published additional Liability Management Scenarios, and downgrade our recommendation for 8.25% Notes from a Hold to a Sell at 47.3 cents.
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Aug 8, 2024
Company holds 2Q conference call, bonds rally further, now up 100%. We reiterate Buy recommendation
July 29, 2024
Company pre-announces strong 2Q Results, bonds rally further, now up 80-100%. We reiterate Buy recommendation.
July 18, 2024
Company announces asset sale and intention to engage with creditors. Bonds were up 25% prior to the news, and up 70% post news. We reiterate Buy recommendation.
May 30, 2024
We published a note on recent acquisition. We reiterate Buy recommendation.
May 16, 2024
We host a webinar reassessing CommScopeWatch Replay
May 10, 2024
We upgrade our recommendation to a Buy
May 9, 2024
Company reports improved 1Q results – bonds unchanged.
April 23, 2024
LevFin Insights reports management feedback on proposals.
Jan 22, 2024
LevFin Insights reports on proposals from creditor groups.
Jan 18, 2024
Company discloses “Excluded Contributions” maneuver. Covenant Review Answers Frequently Asked Questions on Excluded Contributions.
Dec 4, 2023
CreditSights publishes additional Liability Management Scenarios.
Nov 15, 2023
LevFin Insights reports creditors hire Ducera as FA.
Nov 9, 2023
Company reports weak 3Q results.
Nov 7, 2023
LevFin Insights reports creditors hire Akin.
Oct 30, 2023
Company pre-announces terrible 3Q numbers.
Oct 18, 2023
Covenant Review notes differences between CommScope bonds. CreditSights updates analysis.
Oct 13, 2023
Launch Special Situations coverage of CommScope.
Aug 23, 2023
LevFin Insights report CommScope expected to tap LME playbook.
Aug 3, 2023
CommScope cuts CY23 guidance, Unsecureds sell off 6 points, stock -26%. We maintain U/P recommendation.
July-Sept, 2023
Covenant Review reports on extensive flexibility in the bond & loan documents.