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What 5 Major Wall Street Firms Expect From AT&T's Earnings Call

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AT&T Inc. (NYSE: T) is scheduled to report its fourth quarter 2014 earnings on Tuesday, after the market closes.

Credit Suisse's Expectations

In a report issued on this same date, Credit Suisse research analyst Joseph Mastrogiovanni provided a preview on the results, and lowered his forecast for the company.

According to the report, the research firm expects results generally in line with consensus, after trimming its 4Q14 EPS estimate to $0.54 (from $0.61, in line), and its 2015 EPS estimate to $2.59 (from $2.72). Analysts think that “one weak point could be wireless margins due to high upgrades and solid gross adds,” similar to what they saw from Verizon Communications Inc. (NYSE: VZ), and add that “this could put pressure on consolidated EBITDA.”

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Solid Subscriber Growth

As a result of the increased pressure on wireless margins, derived mainly from competition and upgrades, Credit Suisse reduced its wireless adjusted EBITDA margin from 50 percent to 36.6 percent.

Despite competition, analysts at Credit Suisse expect solid subscriber growth. Therefore, despite raising their churn estimate 17 bps, they left their net add estimate unchanged at 850k.

Expanding In Mexico

Finally, the report highlighted AT&T’s expanding presence in Mexico.

The company recently “announced that it will acquire Nextel International's Mexican assets for $1.875B, less outstanding net debt at closing.” The analysts believe these assets are “a strong fit with AT&T's Iusacell acquisition,” but do not think this will preclude AT&T from bidding for America Movil, S.A.B. de C.V. (NYSE: AMX).

However, “an acquisition of AMX assets would stretch the balance sheet.”

The firm maintains an Outperform rating and a $39 price target on the stock.

Other Research Firms

On top of Credit Suisse, several other research firms provided their own previews for AT&T's earnings. Oppenheimer, for one, sees wireless margins impacted by the iPhone 6, “but less than would be historically expected given AT&T Next.”

Citi remains Neutral on AT&T, and “will look for more details on the Iusacell acquisition on its 4Q/14 results conference call with respect to the implications to its operating financial results and capital spending outlook for 2015.”

For its part, Morgan Stanley believes that the fourth quarter could be tough, but expects “elevated churn to continue in this competitive environment.”  Morgan Stanley maintains an Equal-weight rating and a $34 price target on the stock.

Finally, J.P. Morgan weighed in, and said that it expects –- for 4Q14 -- the biggest quarterly postpaid adds since 2005, up 36 percent year-over-year. The analysts also expect prepaid net adds to rise in 2015.

Latest Ratings for T

Jul 2017Bank of AmericaDowngradesBuyNeutral
May 2017Tigress FinancialUpgradesUnderperformNeutral
Apr 2017SunTrust Robinson HumphreyInitiates Coverage OnHold

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