In a report published Monday, Morgan Stanley analyst Simon Flannery reiterated an Equal-Weight rating on AT&T T.
In the report, Morgan Stanley noted, “AT&T has entered into a definitive agreement to acquire DirecTV for $95 per share, or $67.1 billion, consisting of 70% equity / 30% cash; implies 7.7x 2014E EV / EBITDA. The deal is expected to close within 12 months, and be accretive to EPS and free cash flow within 12 months, with more than $1.6 billion of cost synergies by year three (we estimate that approximately two-thirds of the synergies are from content costs). Meanwhile, management expects to come in at the low end of mid-single digit EPS growth for the year, lowering expectations by 5c for the sale of America Móvil.”
AT&T closed on Friday at $36.74. Shares are down over 2.4 percent at $35.85 in Monday's trading session.
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