AT&T Upgraded, T-Mobile Downgraded; Retail Investors Bullish On The 2 Telecom Plays

RBC analyst Jonathan Atkin is optimistic about AT&T’s growth prospect and shareholder returns but valuation concerns drove him to the sidelines on T-Mobile.

Analysts at RBC Capital Markets reversed their stances on two of the biggest U.S. telecom plays - AT&T, Inc. ($T) and T-Mobile US, Inc. ($TMUS) but retail is uniformly bullish on the two stocks.

In a note released over the weekend, RBC Capital Markets analyst Jonathan Atkin upgraded AT&T stock to ‘Outperform’ from ‘Sector Perform,’ but downgraded T-Mobile stock to ‘Sector Perform’ from Outperform,’ TheFly reported.

Atkin upped the price target for AT&T stock to $26 from $22 but reduced the price target for T-Mobile stock to $240 from $255.

Atkin’s upbeat assessment of AT&T is premised on his increased confidence in growth initiatives and shareholder returns prospects. Citing initiatives disclosed during the company’s recent Capital Markets Day, the analyst upped his estimates through 2027.

RBC said its confidence in AT&T is strengthened by the elimination of legacy costs and the leveraging of fiber investments. 

On Stocktwits, retail sentiment toward AT&T stock improved to ‘bullish’ (60/100) from ‘neutral’ a day ago, and message volume improved to ‘normal.

A Stocktwits user, bullish on AT&T, hoped for a move up toward the $24 level. Another looked ahead to a nice dividend from the company.

AT&T currently pays out an annualized dividend of $1.11, with the dividend yield at 4.9%.

On the other hand, RBC expressed concerns over T-Mobile’s valuation. The firm said the fundamentals are intact, but the valuation appears to be full. It also updated its valuation model, discounting a higher interest-rate environment. 

RBC analysts said the risk-reward for T-Mobile is less favorable, based on the current valuation and the availability of stronger prospects elsewhere. 

Retail is ‘bullish’ toward T-Mobile stock (67/100), an improvement from the ‘bearish’ sentiment that prevailed a week ago. Retail chatter remains ‘normal.’

AT&T advanced 44% in 2024 and T-Mobile stock gained a more modest 39%. The former ended Friday’s session down 0.70% at $22.67, and the latter fell 0.19% to $219.11.

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