jetcityimage/iStock Editorial via Getty Images
AT&T (NYSE:T) was upgraded by J.P. Morgan as the investment firm expects the Dallas-based telecom company to offer consistent, long-term growth in both wireless and broadband.
The most potential for growth stems from its broadband segment and its ongoing fiber buildout providing incremental opportunities in and around existing markets, said J.P. Morgan's Richard Choe and others in a client note Thursday morning.
The firm raised its rating to Overweight from Neutral and increased its year-end price target to $21 from $18.
"We look for AT&T to grow its mobility business at a solid pace with both postpaid phone growth and ARPU for service growth of 3% in 2024 and EBITDA growth of 5.1%," Choe and others said.
AT&T's broadband has now reached 26M fiber locations and is on track to surpass 30M by the end of 2025. Broadband revenue is expected to grow at 7.2% for 2024, the analysts said.
One point of concern with AT&T has been its loss of wireless subscribers, which the telecom giant appears to have mediated.
"We went from losing wireless share to growing our share of subscribers," said AT&T CEO John Stankey, during the company's fourth quarter earnings call on Jan. 24. "As a result, we increased our postpaid phone base by more than 10% to more than [71.2M] subscribers."
AT&T added 273,000 broadband subscribers during the "seasonally slow" fourth quarter and 526,000 postpaid phone adds.
Rivals Verizon (VZ) and T-Mobile (TMUS) were both up a fraction of a percent during pre-market trading on Thursday, while AT&T added 2%.
Analysts are mostly bullish on AT&T. The company has a BUY rating from Seeking Alpha analysts and a BUY from Wall Street Analysts. Seeking Alpha's quant system, which consistently beats the markets, rates it a HOLD.