American Tower downgraded, Crown Castle upgraded at RBC

In refining its models for telecom tower REITs, Royal Bank of Canada downgraded American Towers (NYSE:AMT) to Sector Perform from Outperform and upgraded Crown Castle (NYSE:CCI) to Outperform from Sector Perform.

For the sector overall, the tower companies' commentary on carrier activity has been relatively muted through Q3, "with no significant changes apparent that would lead investors to expect any significant deviation from current site rental revenue expectations," analyst Jonathan Atkin wrote in a note to clients.

The analyst noted that Verizon (VZ) started executing on a high rent relocation initiative. "We believe AMT is the main target, given it is the largest tower landlord for Verizon, with an expiration of its holistic MLA [master lease agreement] with Verizon within the next two years," Atkin said.

"Commentaries from AMT and SBA (SBAC) suggest more colocation activity in Q3, while CCI noted a steady mix of colocations vs amendments, with the amendments outweighing colocations on volume," he added.

RBC's Sector Perform rating on American Tower (NYSE:AMT) contrasts with the SA Quant rating of Strong Sell and the average SA Analyst rating and Wall Street rating of Buy, both at Buy.

For Crown Castle (NYSE:CCI), RBC's Outperform rating disagrees with the SA Quant rating of Sell and aligns with the average Wall Street rating of Buy.