AT&T Inc. (NYSE:T) posted upbeat subscriber growth across its wireless and internet divisions.
However, investor concerns over its profit strategy and the quality of its earnings overshadowed the positive results.
Building on its strong third-quarter subscriber performance, AT&T is positioned to continue its growth by expanding its 5G network to gain market share and increasing prices for its existing customer base.
Also Read: AT&T Gains Wireless Subscribers As iPhone Promotions Fuel Growth
Analyst Take
Bank of America Securities analyst Michael J. Funk maintained a Buy rating on AT&T with a price forecast of $34.
According to Funk, the recent sell-off in AT&T’s stock is a misinterpretation of a strong quarter.
The analyst noted that AT&T reported impressive third-quarter results, beating consensus expectations for postpaid phone, fiber, and Internet Air subscriber additions.
The company also surpassed estimates for key financial metrics and reiterated its guidance for 2025 and beyond, he pointed out.
However, Funk argued that the market reacted negatively for two main reasons: management’s commentary suggesting that Average Revenue Per User (ARPU) is less of a focus, and a perception that the earnings beat was “lower quality” because it was partly driven by lower depreciation guidance.
The analyst mentioned the market is underestimating AT&T’s core strengths and growth drivers. He argued that the company has a significant opportunity to add high-value subscribers in markets where it is currently underpenetrated.
Funk also expected AT&T to gain market share by bundling its services as it rolls out its mid-band 5G spectrum to a broader portion of the country.
Furthermore, the analyst cites a clear path for the company to increase prices for its existing wireless and home internet customers.
While he slightly trimmed his 2026 earnings estimate to account for potentially higher promotional activity, his overall positive thesis remains unchanged. Funk concluded that the company’s strong subscriber growth, stable free cash flow, and potential for market share gains justify a higher valuation.
Funk projected fiscal 2025 sales of $124.82 billion and EPS of $2.07.
Price Action: At&t shares were up 1.26% at $24.93 at the time of publication on Friday, according to Benzinga Pro data.
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