Is AT&T Stock a Buy before Its Q4 Earnings?

On Wednesday, AT&T (NYSE:T) stock rose 1.35% and closed trading at $39.04. Deutsche Bank analyst Matthew Niknam initiated coverage of the stock with a “buy” rating.

Deutsche Bank initiated coverage of AT&T stock

Niknam also gave the stock a 12-month target price of $44. The target price implies a return potential of about 12.7% from its last closing price of $39.04.

According to a CNBC report on Wednesday, “AT&T has unique scale across a wide range of media and communications businesses (fiber, spectrum, satellite TV, television programming, film/TV production, and streaming).”

The report also said that AT&T stock “has outperformed VZ over the past 12 months thanks to a renewed focus on driving cost efficiency, restoring financial discipline to AT&T’s pay TV businesses, and cleaning up the balance sheet/ non-core asset portfolio, all of which have allowed the company to recently return to a more shareholder friendly capital allocation strategy featuring share repurchases in addition to AT&T’s regular dividend.”

Fourth-quarter earnings expectations

AT&T is scheduled to report its fourth-quarter earnings results on January 29 before the market bell.

Wall Street analysts expect AT&T to report an adjusted EPS of $0.87 on revenue of $46.94 billion for the fourth quarter. In the fourth quarter of 2018, the company posted an adjusted EPS of $0.86, which was in-line with the consensus estimate of $0.86. AT&T reported revenues of $47.99 billion, which missed the consensus estimate by about $502 million.

Analysts’ recommendations

About 31 analysts cover AT&T stock as of today. Among the analysts, 14 recommend a “buy,” 15 recommend a “hold,” and two recommend a “sell.” According to analysts’ consensus, AT&T stock has a mean target price of $39.17 and a current market price of $39.04, which suggests an upside potential of 0.3% in the next 12 months. The median target price is $41.00 today.

AT&T’s stock performance

AT&T stock returned 27.7% in the last 12 months. In comparison, Sprint (NYSE:S) and T-Mobile (NYSE:TMUS) have returned -16.9% and 23.4% in the last 12 months, respectively. Sprint stock has delivered negative returns due to continued uncertainty about its pending merger deal with T-Mobile. A group of state attorneys general opposes the merger deal due to antitrust issues. The Department of Justice and the FCC have supported the merger deal. Read T-Mobile and Sprint Merger in Limbo Due to Antitrust Issues to learn more.

AT&T stock is trading 35.0% above its 52-week low and 1.7% below its 52-week high. Based on the closing price on Wednesday, AT&T stock was trading 0.7% above its 20-day moving average of $38.78. The stock is also trading 1.4% above its 50-day moving average of $38.50 and 2.7% above its 100-day moving average of $38.02.

AT&T’s 14-day RSI (relative strength index) score is 57.5. The score denotes that the stock isn’t overbought or oversold. On Wednesday, AT&T’s dividend yield was 5.33%.

Read What to Expect from AT&T’s Q4 Earnings and Will AT&T Stock Sustain Its Momentum in 2020? to learn more.