On Wednesday, Citi updated its stance on AT&T (NYSE:T) shares, raising the price target to $24 from the previous $21 while maintaining a Buy rating. The adjustment reflects the firm's expectations for AT&T's solid financial growth and recent changes in market conditions.
The revision in the price target is attributed to a combination of factors, including a pull-back in 10-year treasury rates and an expansion of the target core enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple to 6.5x, an increase from the earlier 6.0x.
Citi's outlook on the telecommunications sector is positive, noting an improvement in stock valuations which is believed to be a result of growing confidence in the fundamental market environment. The firm also highlighted positive signals from carriers regarding the wireless competitive landscape and potential pricing strategies that could influence future annual service revenue growth.
The analyst's commentary suggests that while there is a general neutrality toward the initial promotions for the new iPhone launch, there is no expectation of a device upgrade super cycle for the remainder of the year and into the first half of 2025. This comes after Apple (NASDAQ:AAPL)'s introduction of its latest iPhone lineup.
AT&T remains Citi's top choice within the coverage group, indicating a favorable view of the company's stock amidst the broader telecommunications industry. The price target increase to $24 signifies Citi's confidence in AT&T's ability to achieve the anticipated financial growth.
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