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AT&T stock has fallen 15% so far this year.
Justin Sullivan/Getty Images
AT&T
landed an upgrade from MoffettNathanson on Tuesday, but the analyst team is hardly bullish on the stock or broader telecoms.
MoffettNathanson raised its rating on the shares of
AT&T
(ticker: T) at Market Perform from Underperform on Tuesday, but it’s all about stock market actions rather than fundamentals.
The company “has now exceeded our target price, and we do not believe that further reduction in our target price is warranted,” wrote Craig Moffett and fellow analysts, maintaining a price target of $17 on the stock. The stock gained 1.8% to $15.67 on Tuesday.
After a strong 2022 for the sector, investors saw telecoms underperform
S&P500
this year, particularly in the past three months, analysts noted, “and AT&T has led the way.”
So far this year, AT&T shares have lost 15%, while
Verizon Communications
(VZ) lost 12%, and
T-Mobile
(TMUS) slipped 7.8%. By comparison, the S&P 500 gained 12%.
“We remain cautious about the outlook for the wireless industry. But so does the market,” Moffett and his team wrote. “The steep declines in stock prices for all of the Big Three, and for AT&T in particular, reflect a suitably sober view.”
AT&T stock took a hit on April 20 after the company’s first-quarter earnings showed slower subscriber growth, analysts noted. Stocks fell 10% that day, their biggest decline in more than 20 years, according to Dow Jones Market Data.
In addition, the threat of competition has shaken telecom stocks. Analysts pointed to the decline in sector shares last week on reports that
Amazon.co.uk
(AMZN) was in talks with several telecommunications carriers to possibly offer low-cost, or even free, nationwide mobile phone service to Prime subscribers.
And while AT&T reluctantly received an upgrade, MoffettNathanson maintained Market Perform ratings on Verizon and
T-Mobile
,
but lowered the price targets to $40 from $42 and $172 from $181, respectively.
Verizon stock rose 0.3% to $34.68, while T-Mobile stock slid 2.5% to $128.88 in Tuesday’s latest trades.
On a more positive note, there appears to have been a drop in “competitive intensity between carriers recently,” the analysts added, pointing out that Verizon and T-Mobile have dropped their device promotions for plans. entry-level. Meanwhile, AT&T continued its promotions.
Reducing promotions drives more revenue and profitability, analysts said. “They also tend to report that the affected carriers feel comfortable enough with their subscribers’ trajectories to be able to waive discounts,” they added.
It may be the sun behind the clouds for the sector.
Write to Emily Dattilo at emily.dattilo@dowjones.com