Morgan Stanley Expects Further Downward Revisions For AT&T After Upcoming Q4 Print

AT&T Inc. T is scheduled to report its fourth quarter results on January 27, after market close.

Simon Flannery of Morgan Stanley expects the company will earn $0.54 per share in the quarter, short of the consensus estimate of $0.57 per share. The analyst expects the company will report total revenue of $34.203 billion, also short of the consensus estimate of $34.28 billion.

“After delivering record postpaid churn in the second quarter, and a strong 0.99 percent in the third quarter, largely ahead of the iPhone launch, the company has guided to churn above 1.11 percent, which raises the question of how effective the migration of customers to Mobile Share Value pricing was,” Flannery wrote.

Related Link: JP Morgan: Here Comes T-Mobile

The analyst adds that the churn rate will settle from an estimated multiyear high of 1.20 percent and the company may be vulnerable due to a large base of iPhone customers, and customers off of contract.

Flannery notes that he expects further downward revisions to estimates following the ongoing intense competitive environment in addition to the spectrum auction as its results may prove to be a negative headline risk.

However, the analyst does note that shares remain well supported by income oriented investors due to its 5.6 percent dividend yield and that the company's acquisition of DirecTV DTV should it close, could also provide relief to the company's free cash flow.

Shares are Equal-weight rated with a $34 price target.