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AT & T is up Friday, helped by an upgrade from UBS.
Where we were: AT & T has fallen behind this year, along with other telecom stocks, although corporate concerns have also weighed on equities.
Where we are going: UBS argues that attractive valuation and improved wireless trends will boost stocks.
Actions of AT & T(T) fell more than 12% this year, but the worst seems to have passed, John Hodulik from UBS: He upgraded the shares to Buy from Neutral and raised his price target from $ 5 to $ 38.
Telecom – the sector that will soon be replaced by communications services – did not have a good year and AT & T was particularly affected by fears related to the integration of communications services. Time Warner and its debt, as well as the necessary investments in the network. However, Hodulik sees much of this pressure already embedded in distressed equities, given that they are not far removed from the lowest valuation levels (with the largest difference between AT & T and Verizon Communications(VZ) multiple in years).
In addition, wireless, which accounts for half of AT & T's earnings before interest, taxes, depreciation and amortization, remains crucial, and highlights in this regard the improvement in average revenue per user in the sector, with fewer promotions. Apple"S(AAPL) iPhone, highlighting a less sliced competitive environment. If the Sprint(S) / T-Mobile US(TMUS) passes by, which should "consolidate" this favorable competitive situation, but even if this is not the case, the inability of other operators to invest in the 5G means that AT & T and Verizon should still draw huge profits.
Time Warner side, he notes that WarnerMedia faces easier comparisons in the second half of the year, although lower costs and ratings "temper" expectations.
AT & T is up 1.7% to $ 34 this afternoon.
To make the connection
UBS is not the only company optimistic about AT & T's prospects.
Nor is it the only company that thinks that stocks have become too cheap.
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