MoffettNathanson upgrades AT&T, but still skeptical about wireless long-term

att

MoffettNathanson upgraded shares of AT&T but said it remains skeptical about the overall wireless market in the long term.

The No. 2 wireless network operator in the U.S. continues to struggle in a market that has become extremely competitive over the last two years. AT&T reported a net loss of 348,000 postpaid phone customers in the first quarter and said revenue dipped on record-low mobile equipment sales.

And while AT&T is moving aggressively into digital media to help offset slowing growth of the U.S. wireless market, its other businesses are struggling as well.

FREE DAILY NEWSLETTER

Like this story? Subscribe to FierceWireless!

The Wireless industry is an ever-changing world where big ideas come along daily. Our subscribers rely on FierceWireless as their must-read source for the latest news, analysis and data on this increasingly competitive marketplace. Sign up today to get wireless news and updates delivered to your inbox and read on the go.

“Certainly, there are few positive signs to which to point,” Craig Moffett wrote in a note to investors. “Competitive intensity may have ebbed a little… but only a little; in fact, just last week, after talking about pulling back, both Sprint and T-Mobile launched yet another round of aggressive promotions. And things will likely only get worse when the next iPhone comes to market this fall. Meanwhile, Verizon and At&T are both shrinking at their fastest pace ever; indeed, every one of AT&T’s major business segments is now contracting. Only international, which represents just 5% of revenues, is actually growing."

Shares of AT&T have slid to the point where they have become attractive in the short term, however, Moffett wrote. The analyst upgraded AT&T’s stock from sell to neutral, and upgraded the entire wireless segment from underweight to neutral. 

But the firm still isn’t sold on wireless over the long term.

“But our call isn’t based on an expectation of an imminent positive catalyst, or even of a longer-term inflection in results. Rather, it is the lack of near-term negative catalysts that would justify maintaining our sell rating on AT&T, and our underweight on the sector,” Moffett wrote. “And, of course, it is a matter of valuations. AT&T’s shares have fallen to a level very close to our target price…. However, as was the case with our Verizon upgrade, we emphasize that we are using a relatively short time horizon here. We remain relatively bearish about long-term trends.”

Suggested Articles

Dish Network may be paying attention to Rakuten’s woes, as it has used the Japanese operator's greenfield 4G mobile network build as an analogy for its…

Verizon’s mobile 5G service, while still limited to small pockets of urban areas, is delivering impressive speed improvements from LTE, according to July…

Common Networks is collaborating with Facebook on the deployment of Terragraph mmWave hardware and technology to enable faster speeds in the home.