+ 0.70
+ 0.47%

Wells Fargo: AT&T In Good Position To Capitalize On Streaming

May 7, 2019 1:14 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
Wells Fargo: AT&T In Good Position To Capitalize On Streaming

AT&T Inc. (NYSE:T) is well-positioned to take advantage of the changing ways Americans watch TV, as more and more people make the switch from cable and satellite to streamed programming, according to Wells Fargo.

The Analyst

Wells Fargo’s Jennifer Fritzsche maintained a Market Perform rating on AT&T with a $30 price target. 

The Thesis

“The shift in video delivery medium from traditional linear to over-the-top (OTT) services is in full swing and streaming is the way of the future,” Fritzsche said in a Monday note looking at how AT&T fits into that change. (See the analyst's track record here.) 

The iconic phone company-turned telecom conglomerate has two important and unique advantages in cashing in on the massive shift in home entertainment habits, Fritzsche said: it owns the distribution network and it has a large, underappreciated amount of content.

“Importantly, T will be the only one of the OTT players which owns a nationwide TV and wireless platform and covers about 55 percent of the US households with broadband capability,” she said. 

The company has OTT services through the DirecTV Now streaming product and WatchTV streaming app. At the end of this year, it plans to roll out a new subscription video on demand service, WarnerMedia Now.

Content Is King

In addition to already having a pipe into more than half of American homes, AT&T has more content than many people realize thanks to its acquisition of Time Warner.

The company has access to the Turner content library, which Fritzsche said is key to its ability to bundle content on its streaming services. AT&T also owns the Warner Bros. movie catalog of more than 2,600 titles going back to the early 20th century.

AT&T is well-positioned to "hold its own" in the OTT space, the analyst said. 

“By layering on a deep content portfolio, with this control of much of the access pipe, it puts T in a unique position vs. its OTT competition in our opinion. That said — we still take a wait and see approach with the stock given this strategy will likely take time to move the needle in revenue.”

Price Action

AT&T shares were down 0.75 percent at $30.36 at the time of publication Tuesday. 

Related Links

AT&T Analyst Day: WarnerMedia Integration, Streaming On The Street's Mind

AT&T's 5G Rollout, Time Warner Acquisition Among The Pillars Of Tigress Financial's Bull Thesis

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.

Related Articles

ViacomCBS Jumps After Double Upgrade, Analyst Raises Price Target By 39%

ViacomCBS Inc (NYSE: VIAC) shares traded higher by 3.9% on Thursday morning after the stock landed a high-profile Wall Street double upgrade. read more

Roku Analyst: Streaming Stock Executing Well, With Attractive Valuation

Shares of video streaming equipment maker Roku Inc (NASDAQ: ROKU), which have rallied over 140% year-to-date, are poised for further upside, according to an analyst at BofA Securities. read more

Netflix Analyst Raises Estimates Ahead Of Q2 Subscriber Report, Sees 'Content Advantage' Over HBO Max, Disney+

Netflix Inc (NASDAQ: NFLX), which added a record net 15.77 million paid subscribers in the first quarter, is poised to comfortably beat its guida read more

Mixed Signals: How Will A T-Mobile-Sprint Merger Play Out For Investors?