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Should You Consider Buying AT&T Stock?

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On February 28, AT&T (NYSE:T) stock fell 1.43% and closed at $35.22. Based on the last closing price, the company has a market capitalization of $252.6 billion—the largest among all of the major US mobile operators. The stock price has fallen 8.6% in the trailing five-day period, while it has risen 13.2% in the trailing 12-month period.

Currently, AT&T stock is trading 11.3% below its 52-week high of $39.70 and 18.7% above its 52-week low of $29.67. On a YTD (year-to-date) basis, the stock has fallen by 9.9% as of February 28. In comparison, the broader S&P 500 Index has lost more than 8.5% YTD.

Last week, CNBC’s Mad Money host Jim Cramer suggested that investors buy AT&T stock at the current levels. Cramer said, “You buy slowly in stages. Next week is stage one. There will be more stages, likely at lower levels.”

Analysts’ recommendations for AT&T stock

Wall Street analysts have given a 12-month mean target price of $39.43 for AT&T stock. The average target price is at a 12.0% premium to the current price of $35.22 on February 28.

Among the 31 analysts tracking AT&T stock, 16 recommend a “hold,” 13 recommend a “buy,” and two recommend a “sell.”

AT&T TV service launched today

Today, AT&T launched its new streaming video service nationally called “AT&T TV.” The service is designed to replace traditional pay-TV services like DIRECTV and U-Verse. The company has been losing pay-TV subscribers over the last few quarters. In the fourth quarter of 2019, AT&T reported a net loss of 945,000 traditional pay-TV subscribers due to intense competition from over-the-top streaming services like Netflix and Amazon Prime. In the fourth quarter of 2018, the company reported a net loss of 391,000 traditional pay-TV subscribers.

According to a Broadcasting and Cable report, “AT&T TV is available bundled with one gigabit AT&T Internet for $39.99 a month, with AT&T Internet costing $39.99 a month. That price is good for 12 months and in some cases 24 months. After that, prices are higher.” The report also said, “Without AT&T Internet, AT&T TV starts at $49.99 for a value package with about 70 cable channels or the first year, with prices rising in subsequent years. The price includes one Android-TV AT&T TV device, a voice remote with Google Assistant and a cloud DVR with 500 hours of storage.”

In addition, AT&T’s WarnerMedia unit plans to introduce its video streaming service, called “HBO Max,” in May.

Stock’s technicals

Based on AT&T’s closing price on February 28, the stock was trading 6.8% below its 20-day moving average of $37.77. The stock is trading 8.0% below its 50-day moving average of $38.29 and 7.8% below its 100-day moving average of $38.22. The stock’s 14-day relative strength index score of 24 indicates that it’s oversold.

AT&T’s upper, middle, and lower Bollinger Bands are $39.56, $37.77, and $35.97, respectively. The stock closed near its lower Bollinger Band level, which also shows that it’s oversold.

With a PE ratio of 9.74x for this year and analysts forecasting AT&T’s earnings to grow 1.27%, the stock looks expensive. For 2021, analysts expect the company’s earnings and revenues to rise by 6.09% and 0.46%, respectively.

On February 28, T-Mobile (NYSE:TMUS) stock fell by 1.18% and closed at $90.16. Meanwhile, Sprint (NYSE:S) stock fell by 1.18% and closed at $9.19. Last month, a US district court judge approved the long-awaited merger deal between T-Mobile and Sprint. To learn more, read Big Day for the T-Mobile and Sprint Merger Deal and T-Mobile and Sprint Amend Merger Terms, Hurdles Remain.

AT&T stock is trending upward in today’s pre-market trading session. The stock rose by about 0.94% at 9:43 AM ET. The company’s dividend yield is 5.9% as of February 28. Read Should You Buy, Sell, or Hold AT&T Stock Right Now? and Will AT&T Boost Its Dividends in 2020? to learn more about the stock.

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