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AT&T Stock: How Much Upside Is Left?

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Aug. 26 2019, Published 8:41 a.m. ET

On August 23, AT&T (T) stock closed at $34.82, implying a rise of 4.8% since its announcement of its second-quarter earnings results on July 24. AT&T stock is currently trading at a discount of 1.9% to its 52-week high of $35.50 and at a premium of 29.9% to its 52-week low of $26.80.

AT&T stock has delivered a strong return this year, outperforming the broader equity market. Year-to-date, AT&T has returned 22.0%, while the S&P 500 Index has risen 7.4%. Despite the surge in AT&T’s stock price this year, the company is still trading at a discount of 14.4% to its three-year high of $43.03. The company’s market cap is $254.4 billion.

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Analysts’ recommendations for AT&T stock

Overall, analysts favor a “buy” rating for AT&T. Among the 28 analysts that cover the stock, 53.6% recommend a “buy,” 42.9% recommend a “hold,” and 3.5% recommend a “sell.” Currently, analysts have a 12-month target price of $34.88 on the stock. On August 23, the company was trading at a discount of 0.2% to analysts’ 12-month target price. The stock’s median target price is $36.00 as of the same date.

Unattractive valuation

AT&T stock is trading at 9.8 times its 2019 estimated EPS of $3.56 and 9.6 times its 2020 estimated EPS of $3.62, both of which look unattractive based on the company’s projected EPS growth rates of 1.1% for 2019 and 1.7% for 2020.

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AT&T’s technical levels

Based on its closing price on August 23, AT&T stock was trading 0.9% above its 20-day moving average of $34.50. It was trading 3.4% above its 50-day moving average of $33.69 and 6.7% above its 100-day moving average of $32.63. On the upside, the company’s immediate key resistance lies near $35.29, while $34.49 could act as an immediate key support level on a daily basis.

AT&T’s 14-day RSI (relative strength index) score was 56, which means investors are neutral toward the stock.

In the trading session on August 23, AT&T stock closed near its Bollinger Band midrange level of $34.50. The value suggests that the stock isn’t overbought or oversold.

In the second quarter, AT&T posted adjusted EPS of $0.89, which was in line with analysts’ estimates. Its revenue came in at $44.96 billion, beating analysts’ estimate of $44.85 billion. After AT&T reported its second-quarter earnings results, its management raised its 2019 free cash flow guidance to $28 billion from $26 billion. To learn more about AT&T’s second-quarter performance, read What Went Wrong with AT&T’s Q2 Earnings?

On August 23, Sprint stock fell 1.89% and closed at $6.74, while T-Mobile stock fell 1.68% to $76.48.

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