AT&T Inc. (NYSE: T) has gripped investor interest on Wallstreet as the company took a heavy hit due to COVID earlier this year. Founded in 1983, AT&T is a US-based telecoms company. AT&T is the second largest provider of mobile services and the largest provider of fixed telephone services in the US. The telecoms giant turned over $42.3 Billion in revenue this quarter, outperforming analysts expectations. With strategic expansion plans set in place for 2021 and beyond, this article will breakdown everything you need to know as investors transition into another year of trading.
Table of contents
Where are analysts predicting the stock will be in 12 months?
Firstly, across the board of 25 Wall Street analysts the company is currently averaging a HOLD rating. According to MarketBeat data, the average 12 month price target set by analysts is $32.48 a share. This is an upside potential of 6%. Interestingly, the average 12 month price target has dropped 10% over the course of the past 6 months.
The following price targets are from larger institutions which allows for investors to understand what smart money is saying about AT&T:
- 11/16/2020 Wells Fargo & Company – Analysts at Wells Fargo reiterated their underweight rating and price target of $25 a share.
- 10/23/2020 Credit Suisse – analysts downgraded their 12 month price target from $33 to $31 a share. Credit Suisse has a neutral rating on AT&T.
- 7/24/2020 Bank of America – BoA analysts reiterated their Buy rating on AT&T, with their 12 month price target sitting at $36 a share.
- 7/1/2020 Morgan Stanley – analysts decreased their price target from $38 to $36 a share. The firm still maintains its overweight rating on the company suggesting AT&T will outperform its competitors.
Whats in the pipeline for AT&T stock moving into 2021?
AT&T is the parent company of Warner Media and many other subsidiaries. This classifies AT&T as one of the worlds largest media and entertainment companies operating in the US.
- AT&T skipped the annual dividend raise for the first time since in 25 years. AT&T have set the quarterly dividend amount to $0.52 per share. The company wrote in a statement that it “expects to have the financial flexibility in 2021 to continue to invest in growth areas, sustain the dividend at current levels, and focus on debt reduction.” See the announcement here.
- The company is also selling Crunchyroll to Sony. Crunchyroll is an anime (Japanese animation) streaming service. AT&T are planning to sell the anime streaming service to Sony Funimation for an acquisition price of $1.18 Billion in an all cash transaction. As of current Crunchyroll has 90 million registered users and 3 million paying users. Reasons behind the selling of Crunchyroll could be due to focusing on the new HBO MAX service.
“Together with Crunchyroll, we will create the best possible experience for fans and greater opportunity for creators, producers and publishers in Japan and elsewhere.”Tony Vinciquerra, chairman and chief executive officer of Sony Pictures Entertainment, said in the statement.
Diving into AT&T financials and the forecasts for 2021
Firstly, as a Blue Chip stock the company is generating an impressive quarterly revenue turnover. The Q3 earnings outplayed analysts predictions, with AT&T increasing their quarter on quarter revenue by 3.39%. The company also reported $8.27 Billion in Free Cash Flow for the quarter. Furthermore, AT&T expects 2020 free cash flow of $26 billion or higher for the year. Across the board of 26 analysts, the average 2021 revenue forecast is currently sitting at $173.28 Billion according to Yahoo Finance data. This is an expected annual growth of 1.60%.
I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, AT&T stock forecast has both arguments for the Bulls and the Bears. The positive opportunities arising in 2021-2022 look to expand AT&T’s long term revenue growth. Evidently, the analysts 12 month forecasts for the stock remain conservative with the upside potential averaging below a 10% return. This can be explained as the company is considered a large cap stock, and short term growth is not generally a strong point. It is a positive sign the company will continue its dividend payout to investors, as we have seen other companies drop this expense entirely.
Written by Tyger Fitzpatrick and research completed by Zac Lorschy.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.