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Investing.com - Wolfe Research raised its price target on AT&T (NYSE:T) to $33.00 from $32.00 on Thursday, while maintaining an Outperform rating on the telecommunications company’s stock.
The research firm highlighted AT&T’s ongoing transition away from troubled legacy businesses toward growth areas like fiber and mobile services. Wolfe Research estimates that businesses in secular decline currently contribute $8 billion, or 18% of EBITDA in 2024, but projects this will shrink to just $3 billion, or 6% of EBITDA, by 2028.
By 2028, Wolfe Research forecasts that fiber and FWA (Fixed Wireless Access) will contribute an incremental $5 billion, effectively offsetting the legacy business declines. The firm notes that AT&T will then earn 94% of its EBITDA from businesses with high barriers to entry, high free cash flow margins, and leading fiber bundling capacity in nearly 40% of the U.S.
Wolfe Research projects 12-14% annual returns through a combination of 3-4% EBITDA growth and a 9.5% free cash flow yield for 2026, which the company can direct toward dividends and share buybacks.
The firm also indicated AT&T will have additional borrowing capacity for spectrum acquisitions, with potential for multiple expansion representing more upside than downside risk.
In other recent news, AT&T reported its second-quarter 2025 earnings, surpassing analysts’ expectations. The company achieved an adjusted earnings per share of $0.54, slightly above the projected $0.53. Additionally, AT&T’s revenue reached $30.8 billion, exceeding the anticipated $30.45 billion. Despite these positive financial results, the stock experienced a decline in pre-market trading. In another development, Evercore ISI raised its price target for AT&T to $28 from $27, maintaining an "In Line" rating. The firm highlighted AT&T management’s effective execution of its strategy focused on 5G wireless and fiber, cost efficiency, and attractive EBITDA and free cash flow. These updates provide investors with insights into AT&T’s recent performance and strategic direction.
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