On Monday, RBC Capital adjusted its outlook on AT&T (NYSE:T) shares, raising the telecommunications giant's price target to $22.00 from the previous $19.00. The firm retained its Sector Perform rating for the stock.
The revision comes as RBC Capital fine-tunes its forecasts in anticipation of AT&T's third-quarter 2024 earnings. The analyst noted adjustments to account for decreased equipment revenue and the timing of Free Cash Flow (FCF) in the second half of the year, particularly due to changes in working capital.
The increased price target to $22 is attributed to higher projected estimates for the out-years, suggesting an expectation of improved performance for AT&T in the longer term.
AT&T's upcoming earnings report will likely be scrutinized for signs that the company is on track to meet these revised expectations. The focus on equipment revenue and FCF will be particularly important for investors following RBC Capital's updated analysis.
This price target adjustment by RBC Capital offers a new perspective for investors as they consider AT&T's financial trajectory and stock performance in the coming quarters.
In other recent news, AT&T Inc. has declared dividends for its common and preferred shares. The telecommunications giant is also reportedly in talks with TPG Inc to merge their DirecTV satellite service with Dish, a move that could potentially reshape the satellite-TV landscape.
Additionally, Citi has upgraded its price target for AT&T from $21 to $24, maintaining a Buy rating and highlighting the company's robust financial growth prospects.
However, AT&T is facing labor disputes, with the Communications Workers of America (CWA) resisting the company's final offer, leading to an ongoing strike involving over 17,000 employees.
The CWA has withdrawn from the mediation process, accusing AT&T of employing stalling tactics. In technology developments, AT&T is integrating Meta Platforms Inc (NASDAQ:META)'s Llama artificial intelligence models into its operations.
These recent developments underscore the dynamic nature of AT&T's business environment. It's important to note that these events are based on recent articles and are subject to change.
InvestingPro Insights
RBC Capital's revised outlook on AT&T aligns with several key metrics and trends highlighted by InvestingPro. The company's market capitalization stands at $157.03 billion, reflecting its significant presence in the telecommunications industry. AT&T's P/E ratio of 14.58, and an even lower adjusted P/E of 10.92 for the last twelve months as of Q2 2024, suggest the stock may be undervalued relative to its earnings potential.
InvestingPro Tips indicate 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 5.07%, which may be attractive to income-focused investors. The stock's strong performance is evident in its 55.77% total return over the past year and its current trading price at 98.03% of its 52-week high.
These insights complement RBC Capital's analysis, particularly regarding AT&T's long-term prospects. The company's solid financials, including $122.2 billion in revenue and a 59.61% gross profit margin for the last twelve months as of Q2 2024, provide a foundation for potential growth.
For investors seeking a deeper understanding of AT&T's financial health and market position, InvestingPro offers 11 additional tips, providing a comprehensive view of the company's strengths and potential challenges.
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