AT&T Posts Mixed Q3, These Analysts Expect Pricing To Improve

Shares of AT&T Inc T came under pressure in early trading on Thursday, after it reported third-quarter results.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

• Oppenheimer analyst Timothy Horan maintained an Outperform rating, while lifting the price target from $23 to $24.
• Scotiabank analyst Maher Yaghi reiterated an Outperform rating and price target of $24.
• RBC Capital Markets analyst Jonathan Atkin reaffirmed a Sector Perform rating and price target of $22.
• Morgan Stanley analyst Simon Flannery maintained an Equal-Weight rating and price target of $19.

Check out other analyst stock ratings.

Oppenheimer: AT&T's service revenues grew by 4.0% year-on-year, which accelerated versus the first half of this year, driven mostly by ARPU (average revenue per user) growth and a one-time item, Horan said in a note. The company's EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 3.4% with margins up 140 basis points (bps) to 38.3%, he added.

"We think T, and the entire wireless industry, would be major beneficiaries of a Republican administration given an expectation of lower taxes and less red tape inhibiting distribution of broadband subsidies," the analyst wrote. AT&T seems to be on track to meeting its 2024 guidance, "benefiting from oligopolistic competition and major network investments," he further stated.

Scotiabank: AT&T reported postpaid phone net additions of 403,000, which fell short of the 468,000 reported last year, Yaghi said. Despite this, an improvement in postpaid phone churn and ARPU growth of 1.9% resulted in wireless service revenues growing 4%, he added.

"As we look ahead to 2025, we expect normalization of industry volumes to continue, with net adds on an annual basis slightly lower vs. F24," the analyst wrote. He stated, however, that ARPU could grow next year, driven by "pricing actions, the uptake of higher priced plans, and value expansion of convergence."

RBC Capital Markets: AT&T's consolidated revenues declined 0.5% year-on-year to $30.2 billion. It missed the consensus of $30.4 billion, "with the shortfall attributable to lower wireless equipment revenues and business wireline," Atkin said. Consolidated adjusted EBITDA grew by 1.8% year-on-year to $11.6 billion, beating consensus of $11.4 billion, he added.

Adjusted earnings came in at 60 cents per share, topping market expectations of 57 cents per share, the analyst stated. "Management maintained guidance, with minimal impacts from weather and labor related factors," he further wrote.

Morgan Stanley: AT&T reported its third-quarter results broadly in-line with expectations, Flannery said. He added, however, that the business wireline segment continued to "be a drag," with revenues declining by 11.8% year-on-year.

The company reiterated its full-year guidance. It now expects "business wireline EBITDA to decline in the high teens this year from mid-teens previously," the analyst wrote. "Management noted relatively low phone upgrade rates and rational promotional environment," he further wrote.

T Price Action: Shares of AT&T had declined by 1.58% to $22.14 at the time of publication on Thursday.

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