AT&T Analysts Reiterate Ratings Following Q1 Earnings Miss On Free Cash Flow

AT&T Inc. T shares were regaining ground in early trading on Friday, after facing a significant drop in response to the company's Q1 earnings report on Thursday. The report highlighted a shortfall in meeting free-cash-flow expectations, despite surpassing earnings per share (EPS) estimates.

BofA On AT&T

Analyst David Barden reiterated a Buy rating and a price target of $25.

Barden pointed to AT&T's Q1 earnings report showing a failure to meet free cash flow projections, but noted that the company maintained its full-year guidance.

"Based on the stock price action, investors appear to be worrying that the 1Qfree cash flow miss might foreshadow a repeat of last year’s 2Q guidance revision," Barden noted.

Despite the market's assumption that postpaid phone growth would slow in 2023, AT&T seems to be maintaining its share of subscribers, he added. "Going forward, the company is guiding to ‘mid-teens’ capital intensity which would imply $21bn at the outside base on our estimates, suggesting upside to consensus FCF in our view," he said in the note.

Morgan Stanley On AT&T

Analyst Simon Flannery reiterated an Equal-Weight rating and price target of $20.

“AT&T investors are once again intensely focused on free cash flow generation after 1Q23 FCF disappointed investors,” Flannery said in a note. “We expect another heavy capex quarter in 2Q23, although the $2.7bn of 1Q23 working capital pressures should abate,” he added.

“We believe that postpaid phone adds were also a negative surprise to some, despite being largely in line with consensus estimates,” the analyst wrote. “The stock action is somewhat surprising given that AT&T reiterated full year guidance,” he further stated.

KeyBanc Capital Markets On AT&T

Analyst Brandon Nispel maintained a Sector Weight rating on the stock.

“AT&T's 10% decline (vs. the S&P 500 -0.7%) is overdone,” Nispel said. “1Q23 results broadly missed expectations, except for postpaid phone subscribers, which should continue to moderate likely leading to decelerating Wireless service revenue,” he added.

Although AT&T reiterated its guidance, it is in a “difficult competitive/strategic position,” the analyst further mentioned.

Check out other analyst stock ratings.

Oppenheimer On AT&T

Analyst Timothy Horan reaffirmed a Perform rating on the stock.

“Our estimates have been consistently under T's FCF guidance the past four years, and it has missed regularly,” Horan said in a note.

The analyst believes it will be difficult for AT&T to meet its fiscal 2023 target of $16 billion, unless the company reduces spending. “Positively, this is largely in its control but it must be disciplined on pricing and handset subsidies,” he added.

Raymond James On AT&T

Analyst Frank Louthan reiterated a Strong Buy rating and price target of $25.

The current working capital drag is likely to reverses through 2023 and become a tailwind for AT&T, Louthan said. The company upheld all its guidance, despite a challenging macro backdrop, which will be “a positive for the name going forward,” he added.

T Price Action: Shares of AT&T were up 3.03% to $18.18 at the time of publishing Friday.

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