Market Overview

AT&T Investors Prepare For Time Warner Deal To Get Put Through The Regulatory Wringer

Share:
Related T
The Highs And Lows Of Earnings Season Dominate July's IMX Results
Investor Movement Index July Summary
Tracking Bruce Berkowitz's Fairholme Portfolio - Q2 2018 Update (Seeking Alpha)
Related TWX
The Market In 5 Minutes: AT&T-Time Warner Appeal, Johnson & Johnson Lawsuit, Theresa May And More
Survey: More Than One-Third Of Millennials Prefer To Watch Netflix On TV Over Cable
TPG-AXON Management LP Buys Tyson Foods Inc, HDFC Bank, Sells Time Warner Inc, Allergan PLC, ... (GuruFocus)

While AT&T Inc’s (NYSE: T) acquisition of Time Warner Inc (NYSE: TWX) represents “a bold move into the media arena,” the synergies are likely to take time to play out, Barclays’ Amir Rozwadowski said in a report. He downgraded the rating on AT&T from Overweight to Equal-Weight, while reducing the price target from $45 to $39.

Analyst Rozwadowski expects AT&T’s shares to remain range bound “for the foreseeable future.”

Increasing Competition

The company’s Q3 results reflected increased competition. Lower net adds in both wireless and video as well as higher mobile churn were offset by broadly in-line margins and better FCF, Rozwadowski mentioned.

Management guided to mid-single-digit EPS growth. The analyst added, however, that video margin compression offsets potential upside.

Vertical Vision To Take Time

AT&T’s $85billion acquisition of Time Warner “is clearly a bold move into the media arena underscoring our view that vertical deals are likely the next play for access providers,” the analyst commented. He noted, however, that while earnings and FCF accretion would yield higher dividend, “proof points of its revenue synergy focused strategy will take time to materialize.”

“An extensive regulatory review process and AT&T’s own collar on the shares suggests range-bound performance for the foreseeable future,” Rozwadowski wrote.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for T

DateFirmActionFromTo
Jul 2018Bank of AmericaUpgradesNeutralBuy
Jul 2018Raymond JamesDowngradesOutperformMarket Perform
Jul 2018Credit SuisseInitiates Coverage OnUnderperform

View More Analyst Ratings for T
View the Latest Analyst Ratings

Posted-In: Amir Rozwadowski BarclaysAnalyst Color Downgrades Price Target Analyst Ratings

 

Related Articles (T + TWX)

View Comments and Join the Discussion!

Corn Futures Trading Higher

Goldman Sachs Celebrates Party City