Citi raises AT&T stock target, maintains Buy on growth strategy By Investing.com
Citi updated its outlook on AT&T (NYSE: T ), raising the stock's price target from $20.00 to $21.00 while reiterating a buy rating. The adjustment follows AT&T's second-quarter earnings, which revealed the company's plans to advance its integrated fiber and mobile approach.
The telecommunications giant aims to expand fiber access and boost investment in 5G mobility, a Citi analyst said on Thursday.
AT&T's strategy aims to strengthen the wireless market to drive annual service revenue growth and improve annual EBITDA, benefiting from high-quality broadband services and ongoing high-performance plans.
Despite a forward valuation of 5.7 times 2025 EBITDA estimates and a 5.8% dividend yield, the market appears to have some skepticism about AT&T's financial growth potential.
The Citi analyst suggests that AT&T has many ways to strengthen its financial performance across different business segments, and is therefore positioned as Citi's preferred stock within the sector.
The earnings, however, acknowledged the potential challenges AT&T may face. including the possibility of wireless competition that could increase the cost, time and significant capital required to expand fiber access, and ongoing challenges in the business cable sector.
Meanwhile, Oppenheimer raised its price target on AT&T shares to $23.00, maintaining an Outperform rating. The company's decision comes after AT&T reported a strong quarter, beating lower expectations with significant growth in postpaid wireless subscribers, average revenue per user (ARPU), and a stable churn rate.
Scotiabank maintained a positive outlook on AT&T, raised the company's price target to $24 and maintained a Sector Outperform rating. The company highlighted AT&T's strategic focus on balancing growth and profitability and praised its performance in the wireless segment. RBC Capital, JPMorgan, TD Cowen, and Evercore ISI have also raised their price estimates on AT&T. The telecom giant's financial results showed revenue and EBITDA were in line with market expectations, while free cash flow exceeded forecasts, mainly due to lower cost of capital.
Also, JPMorgan's revised price target of $24 is based on expectations of 9.4 times the company's estimated 2025 free cash flow and 6.4 times its 2025 estimated enterprise value to EBITDA. Evercore ISI, on the other hand, raised its price target on AT&T shares to $19.00, indicating a positive outlook for the company's future subscriber growth.
InvestingPro Insights
As AT&T (NYSE:T) continues to implement its strategic plans to drive growth, real-time data from InvestingPro provides additional context to the company's financial situation. AT&T's market capitalization stands at a robust $140.46 billion, reflecting the size of its operations in the telecommunications industry. The company's P/E ratio, a key indicator of its valuation, is currently at 13.61, with an adjusted P/E ratio for the last twelve months from Q2 2024 at an even more attractive figure of 9.96. This suggests that investors may find the stock's valuation attractive, especially considering the strong free cash flow yield implied by these figures – a point emphasized by one of InvestingPro's tips. In addition, AT&T has demonstrated a commitment to returning value to shareholders, not only through its outstanding yield of 5.79% but also by maintaining dividend payments for 41 consecutive years.
InvestingPro Tips also highlights that AT&T is a dominant player in the Telecommunications Services industry and has experienced strong returns over the past three months, with a total price return of 17.29%. This momentum is consistent with Citi's positive outlook and recent stock price improvement. For investors looking for more information and tips, InvestingPro offers additional guidance on AT&T, which can be accessed through a special offer: use a coupon code. PRONEWS24 for up to 10% off annual Pro and annual or bi-annual Pro+ subscriptions. There are 6 other InvestingPro tips available that can provide in-depth analysis and investment considerations for AT&T.
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