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

On Friday, German bank The analyst (ETR:) updated the financial model for AT&T (NYSE:T), which led to an increase in the price target for the telecommunications giant’s stock. The new target is set at $26.00, up from the previous $24.00, while the company continues to recommend 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 upgrades and industry switching activity. This anticipated change is attributed to the generative AI integration of Apple’s (NASDAQ:) iOS18, which is scheduled to launch in fall 2024. Additionally, the analyst revised free cash flow (FCF) estimates upwards after more detailed analysis.

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

Consistent execution of operations and the potential to increase wireless market share contribute to the favorable view. 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 FCF consensus estimates for the years beyond 2025 may underestimate the company’s potential. AT&T’s valuation is considered very attractive, with an estimated 8.5% unleveraged 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 set to receive a hefty payout after a federal jury ordered it to compensate subscribers of its “Sunday Ticket” service for more than $4.7 billion in damages. The telecommunications industry is also facing scrutiny as Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel demands that major companies come up with strategies to combat fake political robocalls made using artificial intelligence.

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

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

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

This article was generated with the assistance of AI and reviewed by an editor. More information can be found in our T&C.