AT&T Inc.

T Details

AT&T Inc. (NYSE: T) is a telecommunications, media, and technology holding company with subsidiaries and affiliates worldwide. Its operating segments are 1) Communications, which includes the Mobility, Business, and Consumer Wireline business areas in the United States and worldwide, 2) WarnerMedia, which is a multinational entertainment company that creates and distributes films, television shows, video games, and other content in both physical and digital formats and 3) Latin America, comprises entertainment and wireless services in Latin America and the Caribbean (under Vrio) and Mexico.

Latest News:

• Recent Commercial Contract: On March 30, 2022, Oldham County selected T to build the county's state-of-the-art fibre network, which will provide high-speed internet to more than 20,000 customer locations. T's Fiber will be available to every home and small business in the county once the project is completed. The USD 33 million projects will extend AT&T's fibre network to over 20,000 customer locations throughout the county. The network will be owned and operated by AT&T. 

FY21 Results:

• Slight Decline in Revenues: Total operating revenues decreased 1.69% to USD 168.86 billion during FY21 (ended December 31, 2021) from USD 171.76 billion during FY20, due to disinvestment in the US Video and other businesses partially offset by growth in revenue in WarnerMedia and Communication segment.
• Surge in Bottom Line: T reported a net income of USD 19.87 billion in FY21 compared to a net loss of USD 5.37 billion in FY20.
• Cash and Debt Position: As of December 31, 2021, the company's cash and cash equivalents stood at USD 21.17 billion, with a total debt of USD 178.70 billion.

Key Risk:

• Spectrum Risk: The capacity of WarnerMedia to distribute linear network feeds of its domestic cable networks to its affiliates could be jeopardized if the Federal Communications Commission (FCC) modifies the electromagnetic spectrum currently used for broadcast television and satellite distribution.

Outlook:

2022 Financial Outlook (Source: Investor Update Presentation, January 26, 2022) 

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

 Stock Recommendation:

T's stock price has fallen 17.28% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 22.02 to USD 33.88. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 29.37.

Considering the correction in the stock price, recent commercial contract, solid fundamental performance, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 24.18, up 0.83% as of April 04, 2022.

Three-Year Technical Price Chart (April 04, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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