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What to Expect for AT&T’s Q2 Earnings

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On July 17, AT&T stock fell 0.5 percent and closed at $30.25. The stock was trading 23.8 percent below its 52-week high of $39.70 and 16.0 percent above its 52-week low of $26.08. At the closing price on July 17, AT&T stock had a market capitalization of $215.5 billion.

What can investors expect from AT&T in the second quarter? The wireless service provider is set to release its June-quarter earnings results on Thursday before the opening bell.

AT&T’s Q2 earnings expectation

Wall Street analysts expect AT&T to post sales of $41.04 billion in the second quarter—a reduction of 8.7 percent YoY (year-over-year) from $44.96 billion. Video customer losses may drag down the top line. Also, analysts expect the telecom company to post an adjusted EPS of $0.79. AT&T posted an adjusted EPS of $0.89 in the second quarter of 2019.

In the second quarter, AT&T’s phone and internet businesses saw higher demand as people stayed at home. However, the company is likely to report DIRECTV pay-TV customer losses due to a rise in cord-cutting.

In the second quarter, AT&T’s WarnerMedia segment introduced a new video streaming service, HBO Max. Investors should watch for management’s commentary on subscribers’ initial response.

Analysts expect AT&T’s revenue to fall by 5.8 percent YoY in 2020 to $170.8 billion and rise by 1.8 percent YoY in 2021 to $173.9 billion. They expect the adjusted EPS to fall by about 10.9%percent YoY to $3.18 in 2020 and then rising by 3.5 percent YoY to $3.29 in 2021.

AT&T's 5G update

AT&T plans to provide nationwide 5G coverage this summer. Currently, the carrier’s 5G network covers about 179 million people in 335 markets. According to PR Newswire, “In parts of some markets, AT&T has enabled dynamic spectrum sharing (or DSS) technology which allows carriers to share the same channel between both 4G and 5G users simultaneously, based on demand, creating a seamless experience for customers. Through DSS, AT&T can deploy 5G faster and more efficiently to help more customers take advantage of 5G technology, sooner. This technology helps create an intelligent and robust network for customers.”

Analysts’ recommendations for AT&T

Among the 31 analysts covering AT&T stock, nine recommend a buy, 19 recommend a hold, and three recommend a sell. Their 12-month target price on the stock is $33.08. On July 17, the stock was trading 9.4 percent below analysts’ target price. The consensus target price for the stock has fallen 1.9 percent from $33.72 in June. Last week, Oppenheimer reduced its target price for AT&T from $47 to $38.

Technical analysis

On July 17, AT&T stock closed 0.8 percent above its 20-day moving average of $30.02, 0.03 percent below its 50-day moving average of $30.26, and 2.0 percent below its 100-day moving average of $30.87. The 14-day relative strength index score of 50 suggests that it is not overbought or oversold.

AT&T stock has an upper Bollinger Band of $30.73 and a lower Bollinger Band of $29.30. On July 17, the stock closed near its middle Bollinger Band of $30.02, which suggests a neutral outlook.

Analysts expect T-Mobile to report sales of $17.6 billion in the second quarter. The higher estimate, which represents a 60.1 percent increase YoY from $11.0 billion, is based on the acquisition of Sprint in the second quarter. Also, analysts expect T-Mobile to post an adjusted EPS of $0.10 in the second quarter compared with $1.09 in the second quarter of 2019.

On July 17, T-Mobile stock rose by 0.8 percent and closed at $105.35. Brokers’ average target price of $115.25 for T-Mobile implies a 9.4 percent return over the next year.

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