On Tuesday, Scotiabank (TSX:BNS) analyst Jeff Fan increased the price target for AT&T (NYSE:T) shares to $26.00, up from $24.00, while reiterating a Sector Outperform rating for the company. Fan's adjustment reflects his belief in the company's ongoing positive performance and growth potential, despite broader market challenges.
AT&T's stock responded favorably on the day, which Fan attributes in part to investors seeking stability amidst a broader market downturn. He noted that AT&T's financial results support the continued Sector Outperform rating. Fan has long advised that AT&T's direction and success should be measured by its Free Cash Flow (FCF) and its consistency quarter over quarter.
Despite an anticipated rise in cash taxes for AT&T in 2025 and significant investments in fiber and wireless network infrastructure, Fan pointed out that the company's organic growth is robust enough to counterbalance these factors. This growth trajectory is expected to enable AT&T to increase its FCF per share in 2025.
In his analysis, Fan justified the revised price target by increasing the valuation multiples for AT&T's Consumer and Wireless segments. This decision was based on improving trends in growth within these areas of the business. The upgraded price target suggests that Scotiabank has confidence in AT&T's strategy and its potential to deliver shareholder value in the face of upcoming financial obligations and market investments.
In other recent news, AT&T has outperformed expectations with its fourth-quarter results for 2024, reporting a significant rise in net income to $4 billion. Despite this, the full-year net income saw a decrease from $14.2 billion in 2023 to $10.7 billion in 2024. AT&T also recently entered into an $850 million deal with Reign Capital, involving 74 less utilized properties across the U.S., a transaction expected to generate immediate cash and potential future profit from property redevelopment.
Analysts from KeyBanc Capital Markets, Bernstein's SocGen Group, and Raymond (NSE:RYMD) James have provided varied assessments of AT&T. KeyBanc maintained a Sector Weight rating, while Bernstein raised the price target for AT&T shares to $29, maintaining an Outperform rating. Raymond James maintained a Strong Buy rating for the telecom giant.
However, AT&T experienced a significant security 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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