Piper Jaffray Reiterates Overweight Rating on AT&T
August 31, 2011 3:40 PM
Piper Jaffray is out with a research report this afternoon, where it reiterates its Hold rating on AT&T (NYSE: T); it has a $34.00 price target on the stock.
The Piper Jaffray analysts cited the recent announcement by the US Department of Justice has filed an antitrust lawsuit to block the proposed merger of AT&T and T-Mobile USA.
The basis of their opinion is that competition would suffer if national wireless carriers were reduced to 3 from 4. If the deal is dead, Sprint and the towers are near-term beneficiaries, but the real question could be if any other industry consolidation scenarios will soon play out.
As for valuation, the analysts remarked, “OW, $34 PT based on a 4-year DCF analysis using a terminal cost of capital of 7.9%, and a terminal growth rate of 2.0%. It implies 13.2x our 2012 estimate.”
