On Monday, RBC Capital Markets revised its stance on AT&T stock (NYSE:T), upgrading the telecommunications giant from Sector Perform to Outperform and increasing the price target to $26.00, up from the previous $22.00. The adjustment by RBC Capital reflects a positive outlook on AT&T's future performance, driven by strategic initiatives the company discussed during its recent Capital Markets Day.
The analyst at RBC Capital cited the elimination of legacy costs and the effective use of fiber investments as key factors that bolster confidence in AT&T's performance, extending beyond 2027. These initiatives are expected to enhance AT&T's growth prospects and the potential for shareholder returns when compared to its industry peers.
AT&T's efforts to streamline operations and focus on core growth areas have led to the raised estimates through 2027. The improved financial outlook, according to RBC Capital, justifies the upgraded stock rating and increased price target.
In the comparison of valuation multiples, AT&T is currently trading at roughly the same multiple of estimated 2025 EBITDA as Verizon (NYSE:VZ), at approximately 6 to 7 times, which contrasts with T-Mobile's higher multiple in the range of 10 to 11 times. This valuation parity with Verizon, combined with the strategic initiatives in place, underpins the rationale for the upgrade.
The new price target of $26.00 represents RBC Capital's confidence in AT&T's ability to outperform its sector, reflecting both the company's internal progress and its competitive position in the telecommunications market.
In other recent news, AT&T continues to be in the spotlight with several financial analysts revising their stance on the company. BofA Securities maintained a Buy rating on AT&T, expecting the company to deliver results in line with its full-year guidance, and potentially initiate a share buyback program.
Bernstein and Deutsche Bank (ETR:DBKGn) also initiated coverage on AT&T with an Outperform and Buy rating respectively, highlighting the company's return to its core competencies and a positive outlook on its strategic plan. Furthermore, the Supreme Court's decision not to hear an appeal contesting a New York law mandating broadband rate caps for low-income households has been viewed as a setback by the telecom industry, impacting AT&T.
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