AT&T Earnings Show 'Solid Sequential Momentum'

AT&T Inc. T shares traded higher by 5.5.% after the company reported third-quarter earnings on Thursday morning.

The Numbers: AT&T reported adjusted EPS of 76 cents, in-line with consensus analyst estimates. The company also reported revenue of $42.3 billion, beating analyst expectations of $41.5 billion. Revenue was down 5.1% from a year ago.

AT&T reported 645,000 net new phone subscribers in the quarter, far exceeding analyst expectations for a net loss of 9,000 customers. AT&T said it had 38 million U.S. HBO and HBO Max subscribers last quarter, up from 36.3 million in the second quarter. The services now have 57 million global subscribers.

AT&T is still well behind leading streaming video services, including Netflix, Inc NFLX with nearly 200 million global subscribers and Walt Disney Co DIS with more than 60 million subscribers.

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Analyst Reacts: Bank of America analyst David Barden said AT&T’s business has "solid sequential momentum" heading into the fourth quarter.

“The question for trading is how the stock will react to results that were generally in-line on financials, ahead on metrics, guidance for higher free cash flow, and maintaining the commitment to the dividend,” Barden wrote in a note.

He said AT&T reinstituting free cash flow guidance of more than $26 billion and guiding for a dividend payout ratio under 60% were also bullish takeaways moving forward.

Bank of America has a Buy rating and $36 price target for AT&T.

Benzinga’s Take: Overall, AT&T had a pretty solid quarter. The biggest potential red flags for investors are AT&T’s falling revenue and its massive $149 billion debt load.

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