KeyBanc: AT&T (T.US) pulls back, bringing a buying opportunity, upgraded to "hold" rating.

KeyBanc stated that the stock price of AT&T (T.US) has fallen from its high levels over the past five years, providing investors with a very attractive buying opportunity, as the company plans to provide fiber services to 60 million households and businesses, as well as recently acquiring spectrum from EchoStar Corporation Class A (SATS.US), making it a "clear leader in the convergence space." KeyBanc analysts Brandon Nispel and Matt Sbriglio have upgraded their rating on AT&T from "sector perform" to "overweight." Given the company's attractive growth prospects and capital returns, they have set a target price of $30. The analysts stated in their report: "We anticipate AT&T's converged subscribers to be around 6.2 million by the end of 2025, doubling to nearly 12 million by 2030, while its closest competitor has less than 10 million subscribers." Regarding the outlook for this "fundamental growth," KeyBanc analysts expect AT&T's adjusted EBITDA growth to increase from around 3% in 2025 to nearly 5% in 2027/2028, driven by growth in the mobile and broadband businesses and cost savings. They added, "Given the strong capital returns and reasonable valuation, we believe this risk/reward profile is compelling." KeyBanc analysts believe that a return of $2.12 per share to shareholders by 2026 (approximately an 8.5% yield) appears "relatively attractive," and this number is expected to grow over time. Coupled with an expected EPS growth of 6%, this implies a total return rate close to 15%, which is advantageous compared to Verizon (VZ.US) and T-Mobile (TMUS.US). The upgrade by KeyBanc came after the company's recent quarter earnings announcement. AT&T added 288,000 fiber customers, exceeding expectations, and postpaid net adds for wireless were 405,000, higher than the expected 331,000. Danil Sereda, Head of Beyond the Wall Investing investment group and Seeking Alpha analyst, stated, "The strong postpaid mobile network additions and low churn rates in mobile services, coupled with 2.3% growth in mobile service revenue, indicate that the company's core wireless business continues to maintain a strong position."