Uniti Group: 17% Yield Bonds Offer A Better Play Than The Stock

Core Viewpoint - The article discusses the recent upgrade of Uniti Group Inc (UNIT) stock from a "Sell" to a "Hold" rating, highlighting the potential for recovery despite ongoing challenges, particularly related to its merger with Windstream and the implications of losing its REIT status [6][10][12]. Financial Performance - Uniti Group Inc's market capitalization is currently approximately $665.51 million, while its enterprise value stands at around$6.285 billion [5]. - The stock is trading 44% below its 200-day moving average, indicating significant undervaluation relative to historical performance [12]. - Since its spin-off from Windstream in 2016, the enterprise value has remained relatively stable around $6.5 billion, but the market capitalization has drastically decreased from near$5 billion to its current level [13][14]. Investment Strategy - For investors considering a bullish position, the article suggests focusing on bonds rather than equity, particularly secured bonds maturing in 2028 with yields around 10.4% to 10.5% [16][17]. - The unsecured bonds maturing in 2030 offer a higher yield, approximately 17%, making them a more attractive option for those who believe in the long-term value of Uniti's fiber assets [18]. Market Context - The article notes that the general consensus among analysts is that revenue declines for Windstream are expected to continue at around 3% before stabilizing as the company shifts its focus away from enterprise revenues [6]. - The potential tax implications of Uniti moving out of its REIT status could further complicate value creation, as it may lead to a reduction in dividends [6][10].