JP Morgan downgraded AT&T (T) Friday on a neutral note amid concerns competition will continue to slow growth and uncertainty over lead-sheathed cables installed by U.S. telecommunications companies. Continuing its 2023 slide, the T stock plunged into the news.
JP Morgan analyst Philip Cusick cited a high interest rate environment that could provide investors with alternatives to high-dividend stocks. Cusick lowered his price target on the T stock to 17 from 22.
“We are concerned that repeated downgrades to its core wireless and fiber growth businesses, the high interest rate environment and new uncertainty over lead-sheathed cables will limit any substantial rebound.” , Cusick wrote in a note to clients.
The Wall Street Journal reported that telecommunications companies have installed potentially dangerous lead-covered cables on poles, in the ground and under water for decades. They may need to take steps to make the areas environmentally safe, the Journal said.
In addition, the second quarter results for the T stock are expected on July 26. In addition, AT&T recently lowered its expectations for adding postpaid phone subscribers.
In trading today, AT&T stock fell 1% to 16.96.
S&P 500 outperforms T-stock
In 2023, the T share lost 17%. The S&P 500, meanwhile, gained almost 18%.
AT&T’s free cash flow growth is critical as it supports the telecom dividend. For fiscal year 2023, AT&T forecasts free cash flow of $16 billion.
AT&T stock holds a relative strength rating of just 12 out of the best possible 99, according to IBD Stock Checkup. Additionally, the best stocks tend to have an RS rating of 80 or higher.
In terms of institutional ownership, the T stock has an accumulation/distribution rating of E.
The grade ranges from the best possible A+ to the worst possible E. The note analyzes a stock’s price and volume changes over the past 13 weeks of trading.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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