20 Sep

Can AT&T Stock Add Value to Your Portfolio?

WRITTEN BY Ambrish Shah

AT&T (T) stock rose about 1.06% on Thursday and closed the trading day at $37.15. According to Barron’s report on Thursday, the stock has risen “as the telecoms giant is reportedly exploring a spin off of its satellite TV unit DirecTV following pressure from hedge fund Elliott Management.”

However, Reuters reported that AT&T and Dish Network (DISH) aren’t in talks about a DIRECTV deal due to regulatory concerns.

Jim Cramer likes AT&T stock

On Thursday, Jim Cramer, CNBC’s Mad Money host, suggested buying AT&T stock, according to a CNBC report. Cramer said, “Right now. You buy it right now. You’ve got Elliott [Management] in there, those guys are incredibly good. … I think ATT is going to come and do what they want because they are so darn smart.”

Elliott Management’s stake in AT&T

Elliott Management, an activist investor, holds a stake worth $3.2 billion in AT&T. Notably, Elliott Management thinks that AT&T is deeply undervalued. Currently, the company faces pressure from Elliott Management. The investment firm pressured AT&T to transform its business and divest certain non-core assets like DIRECTV. Elliott Management suggested that “AT&T must undergo a strategic shift away from acquisition and toward execution.” The activist investor criticized AT&T for its acquisition of Time Warner for $85 billion and DIRECTV for $49 billion.

Elliott Management noted that its restructuring plan for AT&T could push the stock price over $60 per share by the end of 2021. The target price suggests more than 61% upside potential from the closing price of $37.15 on Thursday.

Analysts’ recommendations and target price

Among the 28 analysts tracking AT&T, 14 recommend a “buy,” 13 recommend a “hold,” and one recommends a “sell.” The mean target price of $36.12 for the stock implies a downside of approximately 2.8% from the current price of $37.15.

AT&T’s stock returns

AT&T stock is trading 4.13% lower than the 52-week high of $38.75 it saw on September 11. Meanwhile, the stock is trading 38.62% higher than the 52-week low of $26.80 it saw on December 26, 2018.

So far, AT&T stock has returned around 30.17% YTD (year-to-date). The stock’s trailing five-day, trailing one-month, and trailing 12-month price movements were -3.2%, 5.0%, and 11.3%, respectively. Based on the closing price on Thursday, AT&T stock was trading 2.3% above its 20-day moving average of $36.31. The stock was trading 6.4% above its 50-day moving average of $34.90.

The company was trading 11.0% above its 100-day moving average of $33.47. AT&T’s 14-day relative strength index score is 60, which indicates that investors are neutral toward the stock.

On Thursday, AT&T closed near its Bollinger Band mid-range level of $36.31. The value indicates that the stock isn’t overbought or oversold.

On the same day, Sprint (S) stock rose 0.15% and closed at $6.74. T-Mobile (TMUS) stock rose 1.10% to $81.00. T-Mobile and Sprint have returned 27.3% and 15.8%, respectively, YTD.

To learn more, read AT&T’s Growth Strategy: How Does It Look? and Why AT&T Stock Hasn’t Had a Great Start This Week.

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