On Wednesday, Goldman Sachs reiterated its Buy rating on AT&T (NYSE:T), maintaining a $25.00 price target for the telecommunications giant. The firm's assessment follows AT&T's latest earnings report, which indicated a solid performance despite the lowered industry expectations set by Verizon (NYSE:VZ)'s earlier report.
The communication from Goldman Sachs highlighted AT&T's ability to sustain its gains after a solid quarter. The firm pointed out that AT&T's wireless business continues to show strong fundamentals and that there is sustained momentum in the company's fiber broadband segment. This comes amid the challenges faced in the legacy Business Wireline services.
According to Goldman Sachs, AT&T has been executing well on key financial metrics, which include wireless net additions, fiber subscriber growth, and growth in EBITDA and Free Cash Flow (FCF). This consistent performance is expected to reinforce investor confidence in the company's growth sustainability.
The firm also noted that the market had set lower expectations for AT&T following Verizon's report, with some investors anticipating possible guidance adjustments from AT&T. However, the company's results and the firm's outlook suggest that AT&T is on track without the need for such changes.
Goldman Sachs believes that AT&T's ongoing success in meeting its financial goals will likely lead to an expansion of the stock's multiple. This optimism is based on the company's ability to maintain growth and investor trust in the face of a shifting telecommunications landscape.
In other recent news, AT&T has seen a surge in wireless subscribers in the third quarter, surpassing analyst estimates with a net addition of 403,000 monthly bill-paying wireless phone subscribers. However, the telecom giant's third-quarter revenue fell short of expectations, reporting $30.2 billion against the projected $30.44 billion. The company's fiber business added 226,000 customers, which fell below the expected 257,860 additions.
AT&T is also under scrutiny from U.S. lawmakers following allegations of Chinese hackers infiltrating the company's networks. The extent of the information accessed and the timeline of the company's awareness of the breach remain unclear.
On the financial front, Citi has maintained a Buy rating on AT&T shares with a consistent price target of $24.00. The firm's optimism is based on AT&T's trajectory towards achieving its financial goals for 2024 and its net debt leverage target by mid-2025.
AT&T also received a price target boost to $24 from BofA Securities, reflecting the company's consistent performance and streamlined corporate structure. Lastly, AT&T has finalized a deal to sell its 70% stake in DirecTV to TPG, a private equity firm, for $7.6 billion.
InvestingPro Insights
AT&T's recent performance aligns with Goldman Sachs' positive outlook, as evidenced by several key metrics from InvestingPro. The company's P/E ratio of 12.87 suggests a relatively attractive valuation, especially considering its strong market position and consistent dividend payments. InvestingPro Tips highlight that AT&T has maintained dividend payments for 41 consecutive years, underlining its commitment to shareholder returns. This is further supported by the current dividend yield of 5.16%, which is particularly appealing in the current market environment.
The company's financial health is reflected in its robust revenue of $122.2 billion over the last twelve months, with a healthy gross profit margin of 59.61%. These figures support Goldman Sachs' observation of AT&T's strong execution on key financial metrics. Additionally, AT&T's stock has shown impressive momentum, with a 52.7% total return over the past year and trading near its 52-week high, as noted in the InvestingPro Tips.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for AT&T, providing a deeper understanding of the company's financial position and market performance.
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