AT&T 'Looks More Like Verizon.' What Wall Street Is Saying About the Stock. | T Message Board Posts


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Msg  856 of 864  at  4/12/2022 5:37:38 PM  by

jerrykrause


AT&T 'Looks More Like Verizon.' What Wall Street Is Saying About the Stock.

 

AT&T 'Looks More Like Verizon.' What Wall Street Is Saying About the Stock.

 
 

Investors sent AT&T stock up nearly 8% on Monday after the spinoff of WarnerMedia. Wall Street analysts seem to be just as upbeat.

The consensus rating on AT&T's (ticker: T) stock rose to Overweight from Hold, according to a FactSet survey. The consensus price target is now $19.76. Several analysts either reaffirmed or launched bullish ratings on the telecom giant this week.

In an April 11 report, J.P. Morgan analyst Philip Cusick moved to an Overweight rating on AT&T stock with a $22 price target after a period of restriction, as AT&T was a client of J.P. Morgan's financial services. J.P. Morgan had held a Neutral rating on the shares with a $34 price target before the restriction began May 17, 2021.

"A more Communications-focused company, AT&T now looks more like Verizon Communications (VZ) than it has in years after shedding the distractions and revenue drag of a declining satellite video business and the capital obligations of the Warner/HBO media businesses," Cusick wrote.

He added, "[W]hile we are wary of the wireless industry overall, and are belowmanagement's guidance for [earnings before interest, taxes, depreciation, and amortization] and [free cash flow] growth, AT&T shares at Friday's close seem like an attractive risk/reward and we believe investors should look to capture this discount before it closes."

Citi analyst Michael Rollins reiterated a Buy rating on AT&T stock with a $22 price target. He sees an opportunity for AT&T to "sustain positive revenue growth, improve margins and free cash flow, and close some of the valuation gap at which it trades relative to its large-cap telecom/wireless competitors."

Rollins expects AT&T's market capitalization to grow to almost $158 billion from $130 billion now, and kept the company on the firm's positive catalyst watch list. Verizon has a $226.4 billion market cap.

Raymond James analyst Frank G. Louthan reiterated his Outperform rating on AT&T stock with a $26 price target.

"While we still expect some disruptions as smaller investors adjust to the new dividend policy and the spinning out of shares in their accounts," Louthan wrote, "we expect institutional interest to rise as the complexity has diminished and the uncertainty around the timing and structure of the deal has been eliminated."

Like J.P. Morgan's Cusick, Louthan also pointed to more-stable results from AT&T given now that it's free of WarnerMedia—a seasonally sporadic media business that, unlike the much simpler wireless business, saw different trends in its advertising and other segments at different points of the year, he told Barron's.

But Louthan doesn't expect AT&T stock to perform well if the U.S. economy heads into a recessionary period. Business fundamentals will remain fine, but telecom stocks don't perform well in recessions, he said.

Bryan Kraft of Deutsche Bank kept his Buy rating with a $24 price target. "We continue to believe the WarnerMedia spin/merge will unlock value for AT&T shareholders, in addition to putting the company on stronger financial footing for the future," he noted.

To be sure, Cowen analyst Gregory Williams rates AT&T stock at Market Perform, and as of Monday his price target of $32 included WarnerMedia operations.

Williams says investors should wait for proof of execution. "We expect more of a 'wait and see' sentiment as we move beyond the…close of the WarnerMedia transaction and as investors get more comfortable [with AT&T] executing on its newly unveiled targets in challenging markets across the board," he told Barron's, noting competition in the 5G wireless space.

 


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