What's Going On With Verizon and AT&T Stocks Tuesday?

Verizon Communications Inc VZ and AT&T Inc T are trading higher after Citigroup analyst Michael Rollins upgraded the rating on the two stocks, assuming a positive view on Telcos over Cable within large-cap communications.

Rollins upgraded Verizon from Neutral to Buy, raising the price target from $39 to $40. Rollins upgraded AT&T from Neutral to Buy with a $17 price target.

Also Read: Telecom Giants AT&T and Verizon Face Investor Skepticism Over Lead-Cable Issue and Debt Load: Report

Various concerns have weighed on Telco sentiment and valuation, including competition, industry structure, higher rates, and lead. 

Rollins sees a more constructive investment case for large-cap Telcos. 

The wireless competitive environment shows positive signs of stabilization that should help operating performance. 

Better forward FCF should also help reduce net debt leverage and support dividend payouts trading at elevated yields of 7.8% for T/VZ. 

Current valuations may discount more than full-remediation cost scenarios for lead, while anticipated updates could help level and narrow the perceived risk. 

The analyst still prefers Buy-rated T-Mobile US, Inc TMUS as his top-ranked pick. 

Potentially positive catalysts may include helpful updates on lead exposure and further evidence of a stabilizing wireless competitive landscape. 

Price Actions: T shares traded higher by 2.99% at $14.63 on the last check Tuesday. VZ shares traded higher by 2.83% at $34.50.