Dallas-headquartered AT&T Inc. (T) is the second-largest wireless service provider in North America and a major global communications carrier, with a market cap of $138 billion. The company operates through its Communications and Latin America segments, providing a diverse array of services, including wireless, local and long-distance exchange, data and broadband, internet, wholesale, and cloud-based solutions.
Shares of this large-cap telecom giant have outperformed the broader market considerably over the past year. T has gained 36.2% over this time frame, while the S&P 500 Index ($SPX) has rallied 19%. In 2024, T stock has gained 16%, while the SPX is up 14%.2 on a YTD basis.
T's impressive performance over the past 52 weeks is even more notable when compared to the SPDR S&P Telecom ETF (XTL). The exchange-traded fund has gained about 18.1% over the past year. Moreover, the ETF’s 9% YTD returns trails behind T’s mid-teen gains over the same time frame.
AT&T saw its share prices rise more than 5% after its Q2 earnings release on Jul. 24, driven by solid subscriber additions and robust free cash flow. Despite a slight annual drop in revenue to $29.8 billion due to a $0.3 billion decline in equipment sales, the company's mobility services revenue surged 3.4% annually to $16.3 billion, and consumer broadband revenues rose 7% to $2.7 billion.
However, for the current fiscal year ending in December, T is projected to report an EPS of $2.22 on a diluted basis, reflecting a decline of 7.9%. The company’s earnings surprise history is mixed. It exceeded estimates in two of the last four quarters while missing on the other two occasions. AT&T failed to surpass its topline and bottom estimates in the most recently reported quarter.
Among the 23 analysts covering T stock, the consensus rating is a “Moderate Buy.” That’s based on 12 “Strong Buy” ratings, one “Moderate Buy,” and 10 “Holds.”
This configuration is slightly more bullish than two months ago, with ten analysts suggesting a “Strong Buy.”
Analysts at multiple brokerage firms raised their price targets for AT&T after its Q2 earnings results. On July 25, TD Cowen's Gregory Williams raised the stock’s price target by 9.5% from $21 to $23 while maintaining a “Hold” rating.
The mean price target of $21.65 represents an 11.2% premium to T’s current price levels. The Street-high price target of $29 suggests an upside potential of 48.9%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
