AT&T gains as analyst Moffett boosts view to Neutral after sell-off
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AT&T stock (NYSE:T) picked up 1.8% Tuesday, outpacing its big-wireless peers, after MoffettNathanson upgraded the company to Market Perform, from Underperform.
That's more of a reflection of AT&T's year-to-date decline, though, than any new sunny outlook. (AT&T stock is down more than 16% so far in 2023, and down more than 25% over the past year.)
"Sometimes, when all seems dark, one sees the early glimmers of a coming dawn," analyst Craig Moffett says.
"This isn't one of those times."
The analysts aren't optimists, he said, and don't see things getting better in wireless generally or at AT&T specifically.
"We do, however, believe that AT&T's stock price now appropriately reflects reality," he said. "AT&T will likely fall short of its full-year free cash flow guidance ... but the market has already priced that in. And we continue to think that AT&T overstates its free cash flow anyway ... but again, so does the market."
Amid the recent telecom sell-off (spurred in part by chatter about Amazon getting into wireless plans), Moffett says he's also "incrementally more constructive" on T-Mobile (TMUS), which has fallen even further than AT&T in recent weeks.
That stock is getting "objectively cheap," but Moffett's not ready to move back to an active stance, given ongoing elevated risks to subscriber growth.
His sum-of-the-parts valuation of AT&T leaves a target price of $17, implying 9% upside. He also rates Verizon (VZ) Market Perform with a price target of $40, down from $42 (and implying 15% upside), and T-Mobile also at Market Perform with a target price cut to $172 from $181 (and implying 34% upside)
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