UPDATE: J.P. Morgan Lowers PT on AT&T Following 3Q Estimates Update

In a report published Thursday, J.P. Morgan analyst Philip Cusick reiterated an Overweight rating on

, but lowered the price target from $40.00 to $38.00. In the report, J.P. Morgan noted, “We are updating our 3Q estimates as a result of the earlier than expected iPhone release and plenty of expected supply compared to last year, as well as faster postpaid and U-Verse adds. We raise our postpaid net adds to 400k from 300k and our 3Q upgrade rate goes to 8.5% from 7.0%, and as a result wireless EBITDA margins goes to 41.0%. In wireline we raise U-Verse video adds to 225k from 200k but take margins to 29.0% from 29.5% on more aggressive promotions, and EPS to $0.64. For 2014, we expect AT&T to face increasing competition in the wireless industry, particularly from Sprint, and we lower our wireless EBITDA margin estimate to 40.8% and EPS to $2.66 accordingly. We maintain our Overweight rating but reduce our YE2014 price target to $38 from $40.” AT&T closed on Wednesday at $33.97.