18 Sep

AT&T Stock: Why Are Analysts Losing Confidence?

WRITTEN BY Ambrish Shah

AT&T (T) stock fell about 0.40% on Tuesday. The stock closed the trading day at $37.16. The stock is trading 4.10% lower than the 52-week high of $38.75 it saw on September 11. Meanwhile, the stock is trading 38.66% higher than the 52-week low of $26.80 it saw on December 26, 2018.

AT&T stock has returned around 30.2% YTD (year-to-date). However, the stock has fallen about 1.60% in today’s trading session as of 10:24 AM ET. The stock also fell in pre-market trading.

Why did AT&T stock fall?

We think that part of the fall could be the result of a recent rating downgrade. Earlier today, DZ Bank downgraded its rating on AT&T stock, according to The Fly. DZ Bank’s Matthias Volkert downgraded AT&T to a “hold” from a “buy” rating. Volkert also set a target price of $38 on the stock. The new target price reflects a potential upside of 2.3% from the company’s closing price of $37.16 on Tuesday. At the closing price of $37.16, AT&T’s market capitalization is $271.53 billion.

Analysts’ recommendations and target price

Most of the analysts gave “buy” or “hold” ratings on AT&T stock. Among the 28 analysts, 14 recommend a “buy,” 13 recommend a “hold,” and one recommends a “sell.”

Currently, analysts have a 12-month target price of $36.12 on the stock. On Tuesday, the stock was trading at a premium of 2.8% to analysts’ 12-month target price. The median target price is $38.00 as of Tuesday.

AT&T’s stock returns

The stock’s trailing five-day, trailing one-month, and trailing 12-month price movements were -1.1%, 6.3%, and 10.5%, respectively. Based on the closing price on Tuesday, AT&T stock was trading 2.9% above its 20-day moving average of $36.12. The stock was trading 6.9% above its 50-day moving average of $34.77.

The company was trading 11.4% above its 100-day moving average of $33.35. With a 14-day relative strength index score of 61.34, the stock is approaching the “overbought” territory.

On Tuesday, AT&T stock closed near its Bollinger Band mid-range level of $36.12. The value indicates that the stock isn’t overbought or oversold.

On the same day, Sprint (S) stock fell 0.88% and closed at $6.78. T-Mobile (TMUS) stock rose 0.82% to $80.21. T-Mobile and Sprint have returned 26.1% and 16.5%, respectively, YTD.

Sprint and T-Mobile have market capitalizations of $27.8 billion and $68.5 billion, respectively.

Elliott Management’s stake in AT&T

Last week, Elliott Management revealed that it owns a stake worth $3.2 billion in AT&T. The investment firm wrote a letter to AT&T’s board of directors. Elliott Management suggested the company restructures its business. The firm also asked the telecom company to divest non-core assets like DIRECTV.

According to a Fox Business Network report on Tuesday, “As the troubles pile up on AT&T Inc.’s DirecTV subsidiary, Wall Street bankers have been inundating the telecom giant with proposals to sell off the satellite TV operator with Charlie Ergen’s Dish Network as one potential suitor.”

Read Should AT&T Be on Your Shopping List in September? to learn more about Elliott Management’s suggestions. Read Why AT&T Stock Hasn’t Had a Great Start This Week to learn more about what’s driving the stock.

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