On Thursday, Oppenheimer sustained a positive outlook on AT&T (NYSE:T), raising the stock's price target to $24.00 from $23.00, while keeping an Outperform rating. The firm highlighted AT&T's strong performance in the recent quarter, noting significant operating leverage and progress in reducing debt.
The company's solid quarterly results were marked by robust broadband subscriber growth, particularly through Fixed Wireless Access (FWA), and resilient postpaid phone growth with industry-leading churn rates, even as prices increased. These factors contribute to AT&T's strong free cash flow (FCF), which supports the company's rapid deleveraging efforts.
AT&T appears to be on track to meet its 2024 guidance, benefiting from limited competition in an oligopolistic market and substantial investments in its network infrastructure. The firm's confidence in AT&T is reflected in their reiteration of the stock as their top short-term telecommunications pick, citing an approximate 10% normalized FCF yield expected in 2026.
However, there are some concerns noted by the analyst. DirectTV, a subsidiary of AT&T, is expected to generate almost $3 billion in FCF, which implies that Street estimates may need to be adjusted downward for 2026.
Moreover, the company is facing increasing cash taxes. Despite these challenges, Oppenheimer's revised price target suggests a bullish stance on the telecommunications giant's financial prospects.
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