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Barclays Explains Reasons Behind Upgrading AT&T, Raising PT To $39

Barclays Explains Reasons Behind Upgrading AT&T, Raising PT To $39

In a note to clients on Tuesday, Amir Rozwadowski, Barclays research analyst, upgraded AT&T Inc. (NYSE: T) to Overweight from Equal weight and increased the price target to $39 from $34 per share, arguing that the company's completion of the DIRECTV (NASDAQ: DTV) acquisition will lead to a boost in earnings going forward.

Rozwadowski was on CNBC recently to explain the reasons behind this upgrade.

Opportunities For Synergies, Driving Down Costs

"I think, with respect to AT&T, the opportunity side here really is the DirecTV acquisition," Rozwadowski began. "I mean, when you look at a acquisition of this size and scope, it provides a lot of opportunities for synergies and driving down costs, providing other opportunities to upsell products. And what that does is it provides AT&T with a diversification avenue to really mitigate some of the risks associated with some of the competitive pressures in the marketplace."

Related Link: AT&T Fined $100 Million; FCC Is "Ignoring Facts In Search Of A Good Story"

Stocks Move Where Numbers Move

Rozwadowski was asked if it really matters that some of the benefits he highlighted are largely inorganic, as pointed out by him in his note. He replied, "Well, I think that from our perspective, we sort of believe that the stocks move where the numbers move and, so, certainly AT&T is buying a lot of these numbers through its acquisition.

"There are longer term opportunities to integrate and synergize DirecTV's product offerings through the other AT&T umbrella. But if the numbers are moving in the right direction – which we believe that they are – after the close of the acquisition, the stock should tend to follow that," Rozwadowski said.

Image Credit: By Michael Rivera (Own work) [CC BY-SA 4.0], via Wikimedia Commons


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