Market Overview

Tougher Fundamentals Trump Strategic Positioning For AT&T

Share:
Tougher Fundamentals Trump Strategic Positioning For AT&T

With limited upside to the price target and several fundamental headwinds expected to increase in 2017, Deutsche Bank’s Matthew Niknam believes that the risk/reward on AT&T Inc. (NYSE: T) is more balanced at the current levels.

Niknam downgraded the rating on the company from Buy to Hold, while lowering the price target from $44 to $43.

“While we continue to believe AT&T's scale and low-cost profile remains a key strategic differentiator vs. peers, we nonetheless note this is our third downward estimate revision since October; our 2017/2018 forecasts are now all 1 percent below the street,” the analyst mentioned.

Tougher Fundamentals

Pointing to the maturing and increasingly competitive environment across all of AT&T’s core segments, Niknam stated that the tougher landscape was likely to pressure the company’s performance in 2017.

“In Wireless, we expect headwinds from elevated competition, market maturation and a looming iPhone 8 refresh to outweigh benefits from AT&T’s 2G network shutdown and continued shift to “no-subsidy” plans,” the analyst noted.

For the Entertainment segment, the analyst expressed a positive stance while lowering the linear video and segment margin estimates to reflect the increasing competition and growth investments.

“As such, we think 4Q results and 2017 targets may re-focus the spotlight on a tougher operating environment AT&T faces in its core segments,” Niknam pointed out.

The analyst believes that a large part of the post-election appreciation in the stock was driven by non-fundamental catalysts, including higher expectations of corporate tax reform and a more moderate regulatory environment.

Image: Mike Mozart, Flickr

Latest Ratings for T

DateFirmActionFromTo
Mar 2019UpgradesMarket PerformOutperform
Dec 2018UpgradesNeutralBuy
Dec 2018UpgradesMarket PerformOutperform

View More Analyst Ratings for T
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Matthew NiknamAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (T)

View Comments and Join the Discussion!

Benzinga's Top Upgrades, Downgrades For January 11, 2017

Trump's Border Tax: Which Auto Makers Are Most At Risk?