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

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AT&T Inc. (NYSE: 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 points out that the company may be vulnerable from a large base of iPhone customers.

Flannery notes that he expects further downward revisions to estimates as a result of an intensely competitive environment, in addition to an upcoming 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 AT&T's 5.6 percent dividend yield. The company's potential acquisition of DirecTV (NASDAQ: DTV), he added, could also provide relief to free cash flow.

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

Latest Ratings for DTV

Feb 2015Brean CapitalDowngradesBuyHold
Feb 2015Buckingham ResearchDowngradesBuyNeutral
Dec 2014CitigroupMaintainsNeutral

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Posted-In: AT&T Churn Rate iPhone Mobile Share Value Morgan StanleyAnalyst Color News Analyst Ratings


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