On Tuesday, Bernstein's SocGen Group raised the price target for AT&T (NYSE: NYSE:T) shares to $29 from $28, while reiterating an Outperform rating on the telecom giant. The firm's analyst, Laurent Yoon, highlighted AT&T's consistent momentum and impressive performance, particularly in its Fiber business.
AT&T has mirrored the success of cable companies prior to 2020, such as Comcast (NASDAQ: NASDAQ:CMCSA) and Charter Communications (NASDAQ: NASDAQ:CHTR), which both saw annual broadband net additions surpass one million. AT&T followed suit, adding over one million Fiber net adds for another year and showing potential to maintain this growth trajectory. The company is expected to surpass a 40% share of passings, with a corresponding 40% Wireless share within Fiber households.
The analyst noted that AT&T's EBITDA margin has seen an improvement of more than 100 basis points from around 23% to approximately 24%, driven by over 200 basis points expansion in both Consumer Wireline and Mobility. However, these gains were slightly offset by challenges in the Business Wireline sector, which is experiencing secular headwinds.
Following the addition of more than 1.1 million Fiber net adds in 2024, which fueled an 18% increase in Fiber revenue and helped achieve quarterly revenues of $2 billion, Bernstein anticipates over 1.2 million Fiber net adds in 2025. This growth, along with ARPU (Average Revenue Per User) growth, suggests a potential upside to AT&T's mid-teens Fiber revenue growth projection for 2025, further supporting continued margin expansion.
Yoon's analysis underscores AT&T's robust position in the Fiber market and its ability to sustain growth and expand margins in the coming years. The increased price target reflects confidence in the company's direction and the anticipated positive financial outcomes stemming from its Fiber and Wireless segments.
In other recent news, AT&T's Q4 earnings for 2024 reported a rise in net income to $4 billion, a notable increase compared to the same quarter of the previous year. However, the full-year net income saw a decrease from $14.2 billion in 2023 to $10.7 billion in 2024. In a significant real estate transaction, AT&T secured an $850 million deal with Reign Capital, involving 74 less utilized properties across the U.S. This deal is expected to generate immediate cash and potential future profit from property redevelopment.
Analyst firms have provided varied assessments of AT&T. Raymond (NSE:RYMD) James maintained a Strong Buy rating, while Argus upgraded AT&T's shares from Hold to Buy. RBC Capital Markets also upgraded AT&T from Sector Perform to Outperform, and Citi analysts maintained a Buy rating.
In terms of security, AT&T experienced a significant breach last year, resulting in the exposure of confidential FBI data. This breach included six months of mobile phone customer data, potentially compromising criminal investigations and national security. These are some of the recent developments for AT&T.
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