Story
AT&T Upgraded to Outperform by Wolfe Research on Strong Fundamentals, Attractive Valuation
Summary
Wolfe Research upgraded AT&T to Outperform with a $29 price target, citing improving subscriber trends, resilient pricing, and an attractive valuation that outweighs the long-term competitive threat from Starlink.
Wolfe Research has upgraded AT&T (NYSE: T) to Outperform from Peer Perform, arguing that the telecommunications giant's strengthening operational performance and attractive valuation overshadow long-term competitive risks from satellite internet providers. The firm set a $29 price target on the stock, suggesting a potential upside of nearly 26% from its recent closing price.
The Analyst's Thesis
The upgrade follows AT&T's stronger-than-expected second-quarter results. In a note to clients, Wolfe Research highlighted several positive indicators, including stabilizing subscriber trends, resilient pricing power, and the company's reaffirmed 2028 financial guidance.
The firm noted that investor concerns about rising customer churn and pricing pressure have eased. This improved outlook is supported by AT&T's recent performance and strategic execution.
Valuation and Financial Outlook
Wolfe Research argued that AT&T's current valuation does not fully reflect its earnings potential. Key metrics and forecasts highlighted by the firm include:
Ad- Valuation: Approximately 9.5 times earnings.
- Dividend Yield: 4.8%.
- Projected EPS CAGR: An estimated 11% compound annual growth rate through 2028.
- Potential Annual Total Return: Roughly 16%.
Reflecting this positive view, Wolfe raised several of its 2026 forecasts for AT&T. The firm now projects adjusted EBITDA of $48.2 billion, earnings per share of $2.34, and an acceleration in share repurchases to $10 billion for the year.
Competitive Landscape and Customer Metrics
While acknowledging that SpaceX's Starlink mobile ambitions represent a long-term competitive risk, Wolfe stated that a material market disruption is unlikely before at least 2027. The firm believes significant hurdles, such as spectrum acquisition and regulatory approvals, will delay Starlink's impact, leaving AT&T's improving execution as a more immediate driver for the stock.
Wolfe also pointed to strengthening customer loyalty as a key operational success. Postpaid phone churn, a critical measure of customer attrition, declined to 0.86% in the second quarter despite a recent price increase. This, combined with lower device upgrade rates, suggests AT&T's strategy of bundling wireless and fiber services is proving effective.
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