UPDATE: J.P. Morgan Downgrades AT&T as Wireless Competition Increases, International M&A Looms
In a report published Wednesday, J.P. Morgan analyst Philip Cusick downgraded the rating on AT&T (NYSE: T) from Overweight to Neutral, but reiterated the $38.00 price target.
In the report, J.P. Morgan noted, “We are downgrading AT&T from Overweight to Neutral and retain our YE2014 price target of $38. We believe that the headwinds that AT&T faced in wireless during 2013 will continue and likely expand in 2014, and new efforts like security or connected car are still maturing making a revenue or margin upside surprise unlikely. In wireline, consumer should continue to grow but enterprise remains weak, and we expect continued margin pressure from growth-based initiatives. For 2014 we expect guidance for again ~2% organic top-line growth and high single digit EPS, though this could be tough given a likely slower buyback than 2013. Finally we believe there is risk of distracting or potentially dilutive M&A, either domestic or international. Among service providers we prefer Comcast, T-Mobile US, or Bell Canada.”
AT&T closed on Tuesday at $34.74.
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