Oppenheimer Says AT&T a “Cheap Stock;” Reiterates Outperform Rating (T, VZ)

Oppenheimer is out with a research report this morning, where it reiterated its Outperform rating on shares of AT&T Inc. T; it has a $32.00 price target on the stock. The Oppenheimer analysts said, “We hosted upbeat investor meetings with AT&T CFO Rick Lindner. T is on pace to achieve its goal of positive revenue growth in 2010, which should show solid operating leverage. T is also one of the few communication companies in the world that is growing earnings in the double-digit range, with a strong balance sheet and the capacity to buy back a substantial portion of its shares outstanding, in our opinion. The company gave some solid reasons as to why the iPhone will not affect its financial results all that much, but also why Verizon Wireless VZ is unlikely to get it until 2H11, or later.” They also noted, “We remain comfortable with our 2010/2011 EPS estimates of $2.30 and $2.55, but we may need to tweak our 2Q10/3Q10 operating forecasts given strong internal iPhone sales,” adding, “T has substantial opportunities to cut costs (operating and capital as a percentage of revenues) which supports free cash flow growth in the low double-digit range, in our opinion. This growth combined with a 7% dividend yield, 12% free cash flow yield and low leverage is very attractive.” They closed by saying, “If T loses iPhone exclusivity (which we now believe is a 2H11 event), AT&T believes it will not severely impact it. A large percentage of its iPhone customers are locked in/network is improving, so if VZW gets the device it would be more likely an upgrade event for VZ's subs.”