AT&T’s wireless business has been a star in 2022, company more resilient – Argus

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AT&T (NYSE:T) was upgraded to Buy with a $24 per share price target by Argus analysts in a note to clients on Thursday.

The firm told investors that AT&T’s Mobility business is driving overall results, the company is rapidly building out its next-generation 5G wireless network, and the company’s focused debt reduction and refinancing in the last few years has made it more resilient.

“With the spinoff of WarnerMedia to Discovery (NASDAQ:WBD), AT&T has finally moved past its long sad foray into the media business. The company has also moved past multiple other asset divestitures and a substantial dividend cut in the last year. Investment spending on 5G and fiber broadband networks in addition to debt reduction are its critical strategic priorities in the near term, toward creating the underlying framework for sustainable long-term growth,” wrote Argus.

They added that AT&T’s wireless business has been “a star in 2022,” with the company adding a substantial number of subscribers despite a price rise.

“Although it has not gained as many subscribers as industry leader T-Mobile, it has done better than Verizon’s (NYSE:VZ) subscriber losses and anemic numbers. The company has gained traction in wireless subscriber acquisitions due to promotions over the last year. While management may now be throttling back promotions, wireless remains the company’s key revenue and profit driver. The wireless business may remain resilient in a recession, given the value subscribers put on wireless connectivity though a recession would likely hurt its commercial enterprise business,” the firm added.

“AT&T shares have begun to recover from the market pummeling the company took in response to the company’s strategic about-face on entertainment, the WarnerMedia spinoff, and the dividend cut though valuation remains below historical norms and the peer average. While telecoms are typically seen as safe havens in turbulent economic times, in AT&T’s case, its focused debt reduction and refinancing in the last few years has made it more resilient in the current macro-environment. Our long-term rating is BUY,” they concluded.