Analysts See Lower Consensus For AT&T

AT&T Inc.'s T consensus earnings estimates are likely to be revised downward in the wake of its recent first-quarter performance update, a couple of analysts said.

The company closed Wednesday at $32.62, down $0.16.

Given overly optimistic expectations regarding both revenue growth from wireless services and profit margins, "Street estimates are likely to come down," Jefferies analyst Mike McCormack said.

McCormack maintained a Buy rating and $39 target, but shaved a penny from his first-quarter estimate, to $0.64 a share, versus the average analyst expectation of $0.66 a share.

Barclays' Amir Rozwadowski said the updated outlook will lead to a "realignment" of consensus estimates for AT&T.

Roswadowski maintained an Equal-Weight rating and $34 target on AT&T, and said the company appeared to lose market share during the first quarter.

AT&T filed an update Wednesday on results for the first quarter ending March 15 along with its 2015 proxy statement.

The company now expects to post wireless subscriber additions of about 400,000 in the quarter, well below McCormack's earlier forecast of 580,000 and Rozwadowski's forecast of 600,000.

First-quarter margins will be pressured by strong acceptance by wireless subscribers of so-called Mobile Shared Value plans, which lack device subsidies, the company said.

Rozwadowski expects pressure on the company's margins will soon ease as a result of cost cutting and plans for lower capital spending.