Analysts say AT&T stock isn’t a buy despite ‘commendable’ performance

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AT&T Inc. has its act together in wireless, but it’s already well understood by Wall Street, according to analysts Lightshade Partners.

After refocusing its business on connectivity in the wake of ill-fated media ventures, AT&T

It’s seen success with its wireless initiative, and that progress is reflected in the stock’s relative performance. As &T’s Stock Underperformed Verizon Communications Inc.

“Over the past year, its dividend yield has fallen below Verizon’s — “as it should,” wrote Lightshade Partners analysts Walter Piecic and Joe Gallone.

Current sentiment “is vastly different from late 2021, when investor disdain for AT&T was perhaps best expressed by a consensus 2022 post-paid phone net add estimate. [900,000],” the analysts continued. AT&T recorded more than 2 million net additions that year.

The Lightshade team expects AT&T to outperform T-Mobile US Inc.

With its wireless-services revenue rising this year but despite the company’s “commendable” relative performance, analysts are no longer recommending &T’s stock. He turned it from buy to neutral on Tuesday.

Analysts’ estimates for wireless-services revenue growth are ahead of &T’s own forecast, but barely above the consensus outlook, and they also add “specific risks.”

“We believe the price increase has not been announced by AT&T,” wrote Piecic and Gallone. “Additionally, the growth of free line promotions may have a larger impact than we expect, especially when pushed by cable operators who no longer report wireless EBITDA. [earnings before interest, taxes, depreciation and amortization] Harm.

AT&T must also deal with its declining wireline business. While wireline, which includes things like home internet and legacy landlines, isn’t as exciting as &T’s wireless business, it still makes up about 35% of the company’s revenue. That means declines in this part of the business could lead to slower growth for AT&T’s overall service revenue.

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“Consumer fiber broadband is a great story, but it represents only 15% of wireline the end of 2022 and won’t be enough to offset declines in legacy consumer and enterprise businesses,” Piecek and Gallone wrote. “Gigapower” [joint venture] An innovative business model for an existing telco with BlackRock, but doesn’t quite move the needle.

He suggests that AT&T “consider more transformative moves to exit declining wireline businesses and structurally increase the size of its consumer wireless business,” because, he notes, bundling is the future of the industry.