Tuesday, KeyBanc Capital Markets maintained a Sector Weight rating on AT&T (NYSE:T) stock, following the company's fourth-quarter results for the year 2024 which surpassed expectations. KeyBanc analyst Brandon Nispel adjusted the 2025 adjusted EBITDA estimates slightly downward by 0.6% to align with AT&T's recent commentary.
AT&T's performance in the fourth quarter showcased robust growth in postpaid phone and broadband net additions, exceeding analysts' projections. Nispel noted that the results from the quarter presented no major concerns and positioned AT&T favorably among its competitors. This advantage is attributed to three key factors: the strategic deployment of fiber, strong momentum in the Mobility division, and consistent capital spending anticipated to drive better free cash flow (FCF) growth relative to peers.
Despite the positive outcome, KeyBanc believes that there are more attractive investment opportunities available in the Cable sector. The firm's conviction in AT&T's long-term target upside remains moderate. Furthermore, with AT&T's stock trading at approximately 6.5 times and 10 times KeyBanc's 2026 adjusted EBITDA and FCF estimates respectively, the stock is considered to be fairly valued at its current price.
The analyst's commentary reflects a cautious optimism about AT&T's strategic initiatives, particularly highlighting the company's fiber network and the Mobility division's performance. However, the slight downward adjustment in the adjusted EBITDA forecast for 2025 indicates a meticulous approach to the company's financial outlook.
AT&T's stable capital expenditure and expected free cash flow growth are seen as indicators of the company's sound financial management and potential for sustained growth. Despite this, KeyBanc suggests that investors may find more significant growth potential in other sectors. The Sector Weight rating implies that the stock is expected to perform in line with the average returns of the stocks that KeyBanc covers within the same industry.
In other recent news, AT&T's fourth-quarter earnings for 2024 saw a rise in net income to $4 billion, a significant increase from the same quarter of the previous year. However, the full-year net income witnessed a decline from $14.2 billion in 2023 to $10.7 billion in 2024. In a noteworthy real estate transaction, AT&T secured an $850 million deal with Reign Capital, involving 74 less utilized properties across the U.S., expected to generate immediate cash and potential future profit from property redevelopment.
In terms of analyst assessments, firms have provided mixed evaluations of AT&T. Bernstein's SocGen Group raised the price target for AT&T shares to $29, maintaining an Outperform rating. 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.
Despite these positive developments, 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 the recent developments for AT&T.
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