On Wednesday, Citi updated its stance on AT&T (NYSE:T), increasing the telecom giant's price target to $28 from the previous $26, while reiterating a Buy rating.
This change follows AT&T's recent analyst meeting where the company provided an encouraging multi-year financial outlook. AT&T has reaffirmed its commitment to organic investment and growth strategies, which are anticipated to drive service revenue and expedite EBITDA/FCF (excluding DTV) growth, potentially leading to a more favorable valuation.
AT&T's strategy includes an extensive update to its fiber rollout, aiming to reach more homes and achieve deeper market penetration, partly driven by convergence. This expansion is expected to enhance the previous projections and consensus estimates. The company also remains optimistic about maintaining its Mobility segment's growth, with 2025 forecasts trending towards the upper end of its annual financial targets.
The telecom provider is also focusing on cost reduction initiatives, such as decommissioning copper networks, which should aid in margin growth. Additionally, AT&T has announced share buyback plans that exceed both Citi's and the consensus expectations, with a particularly strong start projected for the second half of 2025.
Citi's positive outlook on AT&T is bolstered by these developments, leading the firm to select AT&T as its top-ranked pick within the sector. The revised model from Citi takes into account the accelerated fiber expansion and more aggressive share repurchase program, supporting the increased price target. The firm remains bullish on AT&T's stock, encouraging investors to buy.
In other recent news, AT&T has seen a flurry of activity, starting with an upgrade from New Street Research from Neutral to Buy based on strong guidance and share repurchases. The firm's analysis suggests a potential annual return of 15% for AT&T. Meanwhile, AT&T has also made strategic moves, including a $1 billion deal with Corning (NYSE:GLW) to expand its fiber network and a $1.018 billion purchase of spectrum assets from UScellular.
These developments have led to adjustments in analyst price targets, with TD (TSX:TD) Cowen raising its target to $26.00, maintaining a Hold rating, while Oppenheimer increased its target to $24, maintaining an Outperform rating.
On another note, AT&T's recent earnings report revealed total revenues of $29 billion and a 6% EBITDA growth in its Mobility segment. The company also added 403,000 postpaid phone subscribers.
In preparation for its Analyst and Investor Day, Morgan Stanley (NYSE:MS) reiterated an equal-weight rating on AT&T, anticipating announcements of a new buyback program and an expanded fiber build program.
Lastly, a survey by RBC (TSX:RY) revealed that AT&T's mobility customers place the highest value on network quality and are inclined to bundle their services with broadband options.
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