AT&T shares are getting fresh attention from Wall Street after the company’s second-quarter earnings helped calm worries about competition from SpaceX’s satellite broadband plans.
On Thursday, Wolfe Research upgraded AT&T stock and predicted the shares could rise about 26% from Wednesday’s close. The firm said its better outlook is due to AT&T’s success in keeping subscribers with bundled 5G, fiber-optic broadband, and Wi-Fi services on one platform.
AT&T reported a postpaid churn rate of 0.86% for the second quarter, which was better than the 0.9% analysts expected. Churn is the percentage of subscribers who left their contracts during the quarter.
Wolfe also said it is now less worried about Starlink, SpaceX’s satellite broadband service, because it would take a long time for Starlink to build a wireless network that could compete with AT&T, T-Mobile, and Verizon. The firm pointed out that even if Starlink moves into mobile service, getting the needed spectrum could take years, and major carriers probably would not lease cell tower space to Starlink unless it took a very aggressive approach.
Wolfe expects AT&T’s adjusted earnings per share to grow by about 11% each year and says this growth is not shown in the stock’s current price, which is near its lowest level in years. The stock is down about 8% this year, and AT&T is trading at just under 10 times its expected earnings.
Wedbush also released a positive report on AT&T after the earnings, raising its free cash flow estimate and keeping a favorable opinion of the stock, according to ratings aggregators.
