Deutsche Bank Raises AT&T Stock Target on AI Integration Optimism Author: Investing.com

On Friday A German bank The (ETR:) analyst has updated his financial model for AT&T (NYSE:T), leading to a price target increase for the telecom giant’s stock. The new target is set at $26.00, up from $24.00 previously, while the firm maintains a Buy rating on the stock.

The revision reflects minor adjustments to guidance for the second quarter and second half of 2024, with expectations of higher rates of customer modernization and industry change activity. This anticipated change is attributed to the generative AI integration in Apple’s (NASDAQ:) iOS18, which is scheduled for release in fall 2024. Additionally, the analyst revised free cash flow (FCF) estimates upwards after more detailed analysis.

AT&T is considered a leading choice in the Cable and Telecom sector by Deutsche Bank due to its strategic position in fixed-mobile convergence. The company is also recognized for its solid wireless and home broadband business momentum, positive growth prospects for its fiber broadband business and the potential for further margin improvement as networks are phased out.

Consistent operational execution and the ability to increase wireless market share contribute to the favorable outlook. Additionally, the analyst expects AT&T to resume share repurchases in the second half of 2025 after a period focused on debt reduction.

The report also suggests that consensus FCF estimates for years beyond 2025 may underestimate the company’s potential. AT&T’s valuation is considered very attractive, with an estimated 8.5% unlevered free cash flow yield for 2024 and a multiple of 6.1 times projected 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA).

In other recent news, the National Football League (NFL) is facing a hefty payout after a federal jury ordered it to compensate “Sunday Ticket” subscribers with over $4.7 billion in damages. The telecommunications industry is also facing scrutiny as Federal Communications Commission (FCC) Chair Jessica Rosenworcel demands that large companies have strategies to combat fake automated political calls made using artificial intelligence.

In the telecommunications sector, AT&T Inc. (NYSE:). declared quarterly dividends on both its common stock and two series of preferred stock. The declared dividend on the common stock is $0.27 per share, while shareholders of Series A and C preferred stock will receive $0.3125 and $0.296875 per depositary share, respectively.

The company’s CEO, John Stankey, proposed that Big Tech companies contribute to the Universal Service Fund, a government initiative that subsidizes telecommunications and broadband services. This proposal could lead to a new funding model for the program. In a separate development, AT&T is involved in a legal challenge against the Biden administration’s restoration of net neutrality rules.

Finally, there was significant stock trading activity from Congressman Mike Kelly and Rep. Carol Devine Miller, who recently sold their shares in AT&T.

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