AT&T Inc. T has an attractive risk-reward profile, Citi said an upgrade.
The Analyst
Analyst Michael Rollins upgraded AT&T from Neutral to Buy rating and maintained a $34 price target.
The Thesis
AT&T should benefit from a "measured" promotional environment in wireless and continues to improve its competitive position with FirstNet and the marketing of its 5G Evolution, Rollins said in the upgrade note. (See his track record here.)
The telecom has several levers to manage free cash flow and support its net debt deleveraging goals for 2019, the analyst said.
With shares down 23 percent year-to-date, Rollins said the pullback makes the stock more appealing. AT&T shares are trading at a P/E of around 8x times Citi's revised 2019 outlook. The analyst also highlighted the company’s 6.7-percent dividend yield.
Following a meeting with AT&T management, Rollins said AT&T outlined a balanced perspective on the opportunities and challenges facing the firm as a number of operating segments undergo business model transitions.
Price Action
AT&T shares were down 0.43 percent at $29.78 at the time of publication Tuesday.
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