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BoA Upgrades AT&T: 'The Landscape Has Dramatically Changed'

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BoA Upgrades AT&T: 'The Landscape Has Dramatically Changed'
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With the strain of the Time Warner trial now behind it, AT&T Inc. (NYSE: T) is back in favor with some Street analysts.

The Rating

Bank of America Merrill Lynch's David Barden and three other analysts upgraded AT&T from Neutral to Buy and maintained a $37 price target.

The Thesis

From the start, AT&T appears attractive with its price-to-earnings multiple at a 20-year low, the Time Warner merger driving cash and earnings accretion, wireless business trends exceeding expectations and “positive call optionality” from the union of AT&T’s distribution network with Time Warner’s content and advertising inventory, Barden said in the Monday note. (See the analyst's track record here.) 

The analyst previously based a Neutral rating on waning hope for corporate tax reform, expected flowback from the Time Warner merger, and rising competitive pressure.

“Fast forward to today and the landscape has dramatically changed,” Barden said. “Corporate tax reform has passed, deal flowback appears behind us, and Sprint Corp (NYSE: S) and T-Mobile Us Inc (NASDAQ: TMUS) are more focused on cash flow generation than price and market share.”

Bank of America expects AT&T’s first post-merger results to demonstrate positive wireless momentum, margin improvement in the entertainment segment and seasonal strength in Warner Media.

Price Action

AT&T shares were up 1.74 percent at $31.62 off the open Monday. 

Related Links:

UBS Telecom Analyst Talks AT&T's Q2

Raymond James: AT&T To Suffer Extended Overhang From DOJ Appeal

Photo courtesy of AT&T. 

Latest Ratings for T

DateFirmActionFromTo
Sep 2018BarclaysMaintainsEqual-WeightEqual-Weight
Aug 2018Wells FargoMaintainsMarket PerformMarket Perform
Aug 2018Wells FargoDowngradesOutperformMarket Perform

View More Analyst Ratings for T
View the Latest Analyst Ratings

Posted-In: Bank of America Merrill Lynch David BardenAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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