What happened
Shares of broadband and cable giant Charter Communications (CHTR 0.46%) rose another 13.7% in July, according to data from S&P Global Market Intelligence. As coronavirus infections surged across the South and West, work-from-home stocks like Charter benefited, with several Wall Street analysts raising their price targets on it.
Though Charter didn't report earnings until the last day of the month, it wound up being an impressive beat, adding an exclamation point to the stock's impressive July.
Charter is essential to the work-from-home economy. Image source: Getty Images.
So what
The month started off right for Charter, as it earned its way onto the list of Bank of America (BAC 1.70%) analysts' favorite stocks for the third quarter. The stock also received subsequent price target hikes from Deutsche Bank (DB 1.60%) and Guggenheim analysts.
Optimism was fueled by the stay-at-home economy, and by the return of live sports, with Major League Baseball beginning its season and the NBA continuing its 2020 season in Florida. More live sports could be a positive for video subscribers and for local advertising for Charter, which has seen declines in video subscribers for the past few years.
On the last day of the month, Charter reported Q2 earnings that blew away analyst estimates for both revenue and earnings per share. Especially positive was the acceleration of customer net additions, which grew from 203,000 in the year-ago quarter to a whopping 753,000 last quarter. Miraculously, Charter also managed to grow video subscribers, breaking the years-long pattern of declines due to cord-cutting.
Now what
The better-than-expected results led to a boost in shares, as analysts further hiked their price targets post-earnings. Charter is by no means cheap after its big run year to date. But it's generating better-than-expected growth and accelerating profit and free cash flow, now that it has completed the integration of Time Warner Cable and Bright House Networks, which were acquired in 2016. Impressive results combined with Charter's status as a safe stock amid COVID-19 has been a winning formula this year, and should continue to be for the rest of 2020.
