By Emily Dattilo
The tide is turning for AT&T, one analyst team said, lifting its rating on the telecommunications stock.
Oppenheimer analysts Timothy Horan and Edward Yang upgraded AT&T to Outperform from Perform in a Friday research report. They set a target of $21 for the stock price and raised their forecasts for revenue and earnings.
“T has underperformed the market and peers the past few years as the company underwent a difficult transition to position itself as a pure connectivity provider,” Horan and Yang wrote. “We believe these headwinds have moved to the rearview, and the stock is set to benefit from a number of tailwinds.”
The analyst team presented five positive factors. First, they said, the capacity and coverage of AT&T’s network has improved. Second, the company has made strides in terms of broadband subscribership and revenue, with 60% of its broadband customers using fiber connections, which offer better margins than cable.
Third, AT&T has an opportunity to merge its stake in DirecTV, and fourth, management is dedicated to trimming expenses. Finally, they said, the stock has an attractive valuation.
AT&T stock was up 1.7% to $16.68 in premarket trading, while Verizon Communications edged 0.2% higher to $39.04. Futures on the S&P 500 were 0.5% higher. Over the past 12 months, AT&T and Verizon shares are down 15% and 2.7%, respectively.
At the end of 2023, AT&T made waves when it said it had reached a deal with Swedish rival Ericsson to buy up to $14 billion worth of network equipment over five years.
Write to Emily Dattilo at emily.dattilo@dowjones.com