SKN | Barclays Reassesses U.S. Tower Sector as Valuations and Growth Prospects Improve

Key Takeaways:

• Barclays has upgraded American Tower and Crown Castle to Overweight, reflecting a more constructive assessment of valuations and future growth.
• The bank expects U.S. organic tower growth to stabilize at 4% to 5%, with potential acceleration beyond the current weakness.
• Barclays identified spectrum activity, network densification, buybacks and industry developments as potential catalysts for the sector.
• The move illustrates Barclays’ broader approach of identifying areas where depressed valuations may no longer reflect underlying operating potential.

Barclays has taken a more constructive stance on the U.S. communications-tower sector, upgrading American Tower and Crown Castle as the bank sees a combination of depressed valuations and improving operating conditions. The decision is significant not only for the companies involved, but also as an indication of how Barclays is positioning its equity research franchise around infrastructure businesses with recurring revenues and identifiable growth catalysts.

Why Barclays Sees More Value in Tower Infrastructure

Barclays estimates that tower companies are trading at approximately 15 times adjusted funds from operations per share, representing their lowest valuation level in more than a decade. For the bank, that valuation backdrop creates a more favorable risk-reward framework if the industry’s operating fundamentals begin to stabilize.

The bank expects U.S. organic growth to settle around 4% to 5%, supported by contractual escalators and lower customer churn. Barclays also believes the current period of weaker growth could represent a trough, with conditions potentially improving after the second half of 2026 and into early 2027.

How Barclays Identifies the Next Growth Catalysts

The bank’s analysis points to several developments that could strengthen demand for communications infrastructure. Potential settlements involving Dish and EchoStar, additional spectrum transactions and continued network densification could increase requirements for tower capacity. Barclays also highlighted share repurchases and the potential emergence of new wireless competitors as factors that could support industry demand.

This approach reflects a broader feature of Barclays’ research strategy: focusing not simply on current earnings performance, but on the mechanisms capable of changing future cash-flow expectations. For sophisticated investors, that distinction is important because infrastructure valuations can remain compressed until the market gains greater visibility into the next phase of growth.

What the Upgrades Reveal About Barclays’ Positioning

Barclays upgraded American Tower to Overweight and raised its price target to $198 from $195, citing stronger potential domestic leasing activity, international expansion and continued momentum in its CoreSite data-center business. Crown Castle was also upgraded to Overweight, although its price target was reduced to $84 from $92 as Barclays adjusted its valuation assumptions.

The bank maintained an Overweight rating on SBA Communications while lowering its target to $208 from $245, reflecting more cautious expectations for industry consolidation. Nevertheless, Barclays continues to see valuation support and expects growth to resume in 2028 as international churn moderates.

Why This Matters for Private Banking Clients

For HNWI investors, the more relevant takeaway is Barclays’ capital-markets perspective on infrastructure. The bank is identifying potential value where valuations have compressed ahead of a possible normalization in underlying growth. That framework can be relevant when assessing infrastructure exposure within broader diversified portfolios, particularly where recurring contractual revenues and long-duration assets intersect.

For a confidential discussion regarding portfolio structure, cross-border banking relationships and the role of infrastructure-linked assets within a broader wealth strategy, contact our senior advisory team.