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The tax reform bill passed by the U.S. Senate Dec. 2 proposes a reduction of the corporate tax rate from 35 to 20 percent and bonus depreciation rates for years leading up to 2026.
The Analyst
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HSBC Global Research's Sunil Rajgopal reiterated a Buy on Altice USA Inc (NYSE:ATUS) and T-Mobile US Inc (NASDAQ:TMUS), maintaining their price targets at $30 and $70, respectively. Rajgopal reiterated a Hold on AT&T Inc. (NYSE:T) with a $38 pricet target.
The Thesis
A corporate tax cut "remains the biggest value driver" for U.S. telemedia stocks, while the effect of bonus depreciation rates is still uncertain, Rajgopal said. (See Rajgopal's track record here.)
The analyst forecasts a 10-percent upside for stocks in the sector and said Altice, T-Mobile US and AT&T are the companies that could benefit the most from tax legislation.
Pressure from over-the-top companies, competition from other broadband providers, high leverage and low opportunity for M&A are key downside risks for Altice, the analyst said.
An increase in competition, a dramatic decrease in traditional pay TV business and potential M&A in the sector are the main downside risks for AT&T, Rajgopal said. On the bullish side, an improving regulatory climate, softness in the competitive intensity of the US mobile market and higher-than-expected realization from the sale of international pay TV assets are key upside risks for AT&T, he said.
For T-Mobile US, Rajgopal sees deteriorating subscriber growth, more active competition and a possible acquisition at an unreasonable price as key downside risks.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.