Market Overview

PreMarket Prep Stock Of The Day: AT&T

Share:
PreMarket Prep Stock Of The Day: AT&T

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

Every dog has its day, and AT&T (NYSE: T), one of the biggest dogs in this bull market, is really having a great day. The price action off of its third-quarter earnings report makes it the PreMarket Prep Stock Of The Day.

Massive Underperformance: Going back 20 years to October 2000, AT&T peaked that month at $59. At its current price of $28.40, that's a negative return of 52%. Of course, if an investor was actually in the issue that long, some of that negative return would be offset the collection of the company’s handsome dividend payout over that time period.

Nevertheless, it wouldn't come close to matching the return of the S&P 500 over that same period of time at 140%.

Recent Fall From Grace: AT&T ended 2019 at $39.08 and wasn't too far off that level before the March meltdown. By the end of February, it had fallen to $35.22 and during the panic-selling in March swooned to $26.08. That low coincided nicely with its August 2013 low of $26.20.

During the summer rebound in the markets, it rallied to $33.24 in June but was unable to sustain those gains. In fact, its low in Wednesday’s session wasn't far off its March low when it bottomed at $26.54. Interestingly, its close on Wednesday was actually lower than the close when it bottomed on March 23 by a nickel.

Street Leaning The Wrong Way: No one on Wall Street wanted to be long the issue ahead of its print. Since closing Oct. 7 at $28.80, it traded lower in the next nine consecutive sessions, culminating in ending Wednesday's session at a seven-year low.

It should be noted there was some institutional interest in the issue over its two previous sessions as the issue put in a double bottom in place. After bottoming on Tuesday at $26.66, it bottomed just below that on Wednesday ($26.64), setting up a potential exit point if going long into the report and it misses instead of beats.

Surprise, Surprise A Q3 Beat For Sales: Before the open, the company announced inline EPS but delivered a sales beat of $730 million. Also, it revealed that it had restarted production of show and movies and added more post-paid subs than Verizon (NYSE: VZ), for its best-ever post-paid phone churn.

Finally, the company said it's been “borrowing extraordinarily cheaply” to help offset some of its huge debt load.

screenshot_2020-10-22_at_1.30.05_pm.png

PreMarket Prep Take: Dennis Dick is not a fan of the issue in any way whatsoever.

"Every rally in this is a selling opportunity," he said. "I expect AT&T to be in the teens year from now."

With the issue trading just under $28 when it was being covered on the show, the author of this article cited potential resistance points at its Oct. 13 high ($28.13) and its Oct. 14 high ($28.30).

After a higher open, it had a brief retreat to $27.70 and resumed its move higher. The ensuing rally has taken to the issue to $28.50 and has reversed course. As of 1:30 p.m. ET, it has found sellers that have nudged it back down to the $28 area.

The full discussion on the issue from today’s show can be found here:

Photo by Luismt94/Wikimedia.

 

Related Articles (T)

View Comments and Join the Discussion!

Posted-In: Earnings News Technicals Trading Ideas Best of Benzinga