Source: Zhitong Finance
Author: Zhuang Lijia
Goldman Sachs provided broader coverage of the US telecommunications services and infrastructure industry, and first$AT&T (T.US)$,$Verizon (VZ.US)$und$T-Mobile US (TMUS.US)$“Buy” rating.
Goldman Sachs analysts said in a report on Monday: “We believe that the US telecommunications industry is in a phase of transformation. After experiencing a corporate group period marked by loss of shareholder capital, American telecom operators have refocused on their core business.” “For the first time in ten years, we are seeing US wireless carriers enter a period where competition intensity and capital intensity simultaneously slow down.”
For AT&T, Goldman Sachs believes that the company's fiber plan can reverse the downward trend in its breadth business, and that steady wireless business growth should help the company drive steady revenue and profit before interest, tax, depreciation and amortization (EBITDA) growth until 2026. Goldman Sachs said AT&T's differentiation strategy maximizes customer value by providing incentives to minimize customer churn, which has led to “the lowest attrition rate of post-pay phone customers in the past nine months.”
Goldman Sachs pointed out that after gradually reducing media acquisitions, AT&T has experienced a long period of deleveraging and is currently focusing on implementing its core communications business, and is expected to increase its return on capital by mid-2025. Goldman Sachs's target price for AT&T is $22, which has room to rise 17% from the current stock price level.
For Verizon, Goldman Sachs expects the company to achieve continued revenue return, EBITDA, and free cash flow growth over the next 18 months, with the possibility of a buyback in 2025. Goldman Sachs also pointed out that Verizon's execution in the core wireless business is beginning to improve, and the company is expected to achieve a net increase in the number of mobile phone users in the next two years. Goldman Sachs's target price for Verizon is $50, and there is room for a 20% increase from the current stock price level.
As for T-Mobile, Goldman Sachs believes the company is expected to benefit from the favorable situation in the wireless industry in the medium term, and the momentum of its core wireless business will continue, albeit at a “slowing down.” Goldman Sachs believes that the company's value-pricing plan is one of the most attractive plans in the industry, and the company may continue to gain market share as a result. However, Goldman Sachs also pointed out that as the growth rate of post-paid Internet phones slows in 2024 and 2025, the growth rate of the company's market share will slow down somewhat. Goldman Sachs's target price for T-Mobile is $200, which has room to rise 13% from the current stock price level.
Editor/Jeffy