JPMorgan raised its estimate for AT&T's (NYSE:T) second-quarter postpaid phone net adds to 275,000 from 250,000 in a note Thursday, citing lower churn.
"We are tweaking AT&T Mobility segment estimates ahead of 2Q results to reflect recent conference appearances by management and reiterated full-year guidance," explained analysts.
Despite continued normalization in the postpaid phone ecosystem, the bank lifted the estimate based on a lower churn of 0.72% as the switcher pool remains.
"At the same time, we expect AT&T's focus on profitable gross adds to persist with postpaid phone gross adds coming in 8% below the prior year period (vs -11% y/y in 1Q24)," the note adds.
Despite lower volumes (lower churn, lower upgrades) and slightly higher postpaid phone subs, JPMorgan maintained its above-Street Mobility segment EBITDA of $9.20 billion. However, it also lowered its 2Q24 upgrade rate to 2.8%.
The firm said AT&T is a top pick based on steady fiber and phone subs growth as well as improving margin and FCF profile. It reiterated its Overweight rating and $21 target for the stock.