On Tuesday, Raymond (NSE:RYMD) James analyst Frank Louthan increased the price target for AT&T (NYSE:T) to $29.00, up from the previous $28.00, while reaffirming a Strong Buy rating on the company’s shares. Louthan’s endorsement comes after AT&T’s fourth-quarter results, which he believes underscore the company’s undervaluation and potential for growth. The analyst predicts AT&T will be a top large-cap total return opportunity over the next year.
Louthan’s optimism is partly based on AT&T’s recent financial guidance. The company has confirmed its financial targets for 2025 and provided an outlook for the first quarter of 2025. AT&T anticipates earnings per share (EPS) of at least $0.48, free cash flow (FCF) of $2.8 billion or more, and after-tax cash payments from DIRECTV ranging between $1.4 billion and $1.5 billion, with a total of $5.4 billion expected for the full year.
Despite a competitive wireless market, Raymond James has adjusted its estimates for AT&T, now forecasting 195,000 net postpaid additions, down from the previously expected 295,000. The firm also reduced its projection for AT&T’s mobility EBITDA margin by approximately 75 basis points due to increased competitive pressure observed in January. Consequently, the new EPS estimate has been set at $0.49, down from $0.52.
Alongside these short-term adjustments, Raymond James has also updated its long-term financial forecasts for AT&T. The firm has slightly lowered its 2025 revenue, EBITDA, and non-GAAP EPS estimates to $123.98 billion, $45.84 billion, and $2.02 respectively, while maintaining its FCF per share forecast at $2.29. For 2026, revenue and EBITDA estimates have been marginally reduced to $125.75 billion and $47.48 billion, respectively, with a notable increase in the non-GAAP EPS estimate to $2.34 and FCF per share remaining at $2.51.
The analyst highlighted that these estimates continue to exclude the impact of DIRECTV distributions, maintaining consistency with previous financial analyses. Louthan’s reiteration of a Strong Buy rating and the raised price target reflects confidence in AT&T’s capability to generate wireless growth and ramp up free cash flow, which he believes will attract investors back to the stock.
In other recent news, AT&T has outlined its strategic growth plan, emphasizing customer-centric service and network investment. The company projects robust free cash flow for the first quarter of 2025, estimating approximately $2.8 billion or higher, alongside an adjusted EPS of about $0.48 or higher. AT&T is also set to receive cash proceeds from divestitures, with anticipated payments from DIRECTV between $1.4 to $1.5 billion. S&P Global (NYSE:SPGI) Ratings revised AT&T’s outlook to positive from stable, highlighting solid earnings growth and improved credit metrics. The company’s leverage thresholds have been adjusted to reflect a stable competitive environment and improving trends in consumer wireline. Meanwhile, KeyBanc Capital Markets maintained a Sector Weight rating on AT&T, acknowledging its strategic initiatives but expressing concerns about potential capital demands and increased competition.
Verizon (NYSE:VZ), on the other hand, is facing competitive pressures in the telecommunications sector, as noted by Chief Revenue Officer Frank Boulben at a Deutsche Bank (ETR:DBKGn) conference. Boulben emphasized a challenging first quarter with soft growth in new subscriber additions and a shift in consumer behavior regarding device financing. Verizon anticipates a progressive ramp-up in growth throughout the year, despite a slow start. Additionally, the FCC (BME:FCC) has permitted Starlink, in partnership with T-Mobile, to operate a direct-to-cell service at increased power levels, despite opposition from AT&T and Verizon. This decision aims to extend internet access to remote areas and eliminate connectivity dead zones.
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