As AT&T Inc.’s stock may have been overlooked in the past, Wolfe Research’s Peter Supino believes it's time for investors to start paying attention. With positive changes underway, Supino upgraded the stock to outperform and set a target price of $21.
Improvements and Progress
AT&T has seen improvements in churn rates and is now on par with its peers. Despite potential short-term challenges, Supino expects churn to normalize, resulting in stable postpaid phone churn throughout the year.
Competition and Strategy
While facing competition from cable providers, particularly Charter Communications Inc.’s Spectrum Mobile, AT&T is focusing on attracting value-conscious consumers who are drawn to cable offerings.
Financial Stability
After disappointing Wall Street in 2022, AT&T has taken steps to address concerns regarding free cash flow. With an expected $17-18 billion in free cash flow this year, Supino believes the company is moving in the right direction.
Positive Outlook
Despite external challenges, such as convergence and interest rates, AT&T remains focused on growth, efficiency, and debt reduction. With a high free-cash-flow yield and a generous dividend yield, the risk/reward profile for investors looks promising.
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