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On Thursday, UBS analyst John Hodulik reaffirmed a Buy rating on AT&T stock (NYSE:T) with a consistent price target of $30.00. Hodulik’s endorsement follows AT&T’s first-quarter earnings report, which indicated a 3.5% increase in EBITDA, including a 4.4% rise when incorporating a vendor settlement. This growth was attributed to a 3.5% rise in the wireless sector, a 14% increase in consumer revenues, and a 5% decline in business compared to the previous quarter’s respective figures of 6%, 10%, and -22%.
Hodulik’s analysis suggests that AT&T is on track to continue its EBITDA and free cash flow (FCF) growth, spurred by the expansion of its fiber network. Management at AT&T anticipates mobile EBITDA growth at the higher end of the 3-4% range, with consumer revenue growth in the high single digits to low double digits and a mid-teen percentage decline in business revenue. These projections align with UBS’s estimates, which predict a 3.5% total EBITDA growth and more than $16 billion in FCF excluding DirectTV, with about $4 billion expected in the second quarter.
The analyst also highlighted AT&T’s defensive market position, noting that the company is likely to experience minimal direct impact from tariffs, as higher handset costs could be passed on to consumers. This might result in lower upgrade rates and churn over time, potentially boosting profits. Additionally, should tax reform progress, AT&T could stand to benefit significantly within UBS’s coverage area.
AT&T is expected to begin its share buyback program in the second quarter, earlier than UBS’s initial third-quarter estimate. The company has reiterated its guidance to repurchase $10 billion of its shares through the end of 2026, which, combined with a 4.1% dividend yield, represents about 5% of its market capitalization.
In other recent news, AT&T reported its first-quarter 2025 financial results, revealing revenue of $30.6 billion, which surpassed analyst expectations of $30.39 billion. However, earnings per share (EPS) came in slightly below forecasts, at $0.51 compared to the expected $0.52. JPMorgan responded to these results by raising AT&T’s stock price target to $31, maintaining an Overweight rating, citing strong postpaid phone net additions and robust EBITDA growth as key factors. Similarly, Evercore ISI increased its price target for AT&T to $27 from $25, acknowledging the company’s healthy increase in wireless and broadband net additions. Bernstein maintained an Outperform rating with a $29 price target, noting improvements in subscriber numbers and service bundling. AT&T’s strategic focus on expanding its fiber network and leveraging its position in 5G has been emphasized, with plans to reach 50 million locations by 2029. Additionally, AT&T announced a $10 billion share repurchase program, reflecting confidence in its long-term strategy despite minor earnings shortfalls. The company remains committed to its full-year guidance, expecting free cash flow to exceed $16 billion.
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