17 Oct

AT&T Stock Falls, Bernstein Initiates Coverage

WRITTEN BY Ambrish Shah

On October 16, AT&T (T) stock fell 0.3% to close trading at $37.79. Bernstein analyst Peter Supino initiated coverage of AT&T stock with a “market perform” rating. Supino also gave the stock a 12-month price target of $36. This target implies a return potential of about -4.7% from its last closing price of $37.79.

Supino said, “With the balance sheet still stretched and Entertainment and Warner risks skewing to the downside, we will stay tuned.” The analyst also pointed out that AT&T’s mobility business is improving and the company’s dividend yield of 5.5% looks attractive.

Supino has a mostly positive outlook on the telecom sector. Along with AT&T, Supino also initiated an “outperform” rating on T-Mobile (TMUS) with a target price of $103.

AT&T stock: Wall Street analyst ratings

Among the 29 analysts surveyed by Thomson Reuters who follow AT&T, 14 recommend a “buy,” 14 recommend a “hold,” and just one recommends a “sell.”

AT&T’s overall rating score is 2.34, which is equivalent to a “buy.” And the stock’s mean consensus 12-month target price of $36.50 represents a potential downside of 3.4% over its closing price on Wednesday. The consensus target price for AT&T is up from $35.88 in September, a rise of 1.7%.

Barclays increased its target price 12.9% to $35 on AT&T stock. Meanwhile, Evercore ISI boosted its target price 17.6% to $40. Citigroup raised its target price for AT&T stock 13.5% to $42. Raymond James also raised its target price on the stock 14.3% to $40.

Elliott Management’s stake in AT&T

Last month, Paul Singer’s hedge fund, Elliott Management, revealed a $3.2 billion position in AT&T. The activist investment firm shared a plan to raise the company’s stock price by more than 50% by cost-cutting and asset sales. Elliot Management hasn’t particularly called for job cuts.

Elliott asked AT&T to sell its noncore businesses like DIRECTV. However, AT&T has no plans to divest DIRECTV. Please read The Rumored Merger of AT&T’s DIRECTV and Dish: False to learn more.

On October 10, Senator Elizabeth Warren asked AT&T to reject Elliott’s restructuring plan because it could lead to job cuts.

Elliott Management’s proposal could impact about 30,000 jobs at AT&T. According to a Bloomberg report on October 16, “Most of the impact on workers would come from divestitures of DirecTV and AT&T’s landline business and closures of the company’s retail locations, if the company follows Elliott’s suggestions.”

AT&T stock performance

AT&T stock has risen 32.4% this year as of Wednesday. T-Mobile and Sprint (S) have returned around 25.8% and 10.7%, respectively, this year.

At the closing price on Wednesday, AT&T stock was trading 2.5% below its 52-week high of $38.75 and 41.0% above its 52-week low of $26.80. AT&T stock had a market capitalization of $276.1 billion on Wednesday.

For its third-quarter earnings, AT&T is likely to report adjusted EPS of $0.93 on revenue of $45.1 billion.

See What’s Expected for AT&T’s Third-Quarter Results and Does AT&T Stock still Have Room To Grow in 2019? to learn more. Also check out CWA Hits Back at Elliott for Its AT&T Critique.

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