AT&T (T): An Unloved Stock with a Healthy Dividend - Nomura

Nomura Securities analyst Adam Ilkowitz reiterated his Buy rating and $38 price target on AT&T (NYSE: T) following Q4 EPS of $0.55, just above consensus as below-the-line items offset lower profitability. The analyst is positive on the healthy dividend and views it as an unloved stock.

Ilkowitz commented, "The 4Q14 period was tough versus our expectations: a 3% miss in Service Revenue, a 10% miss in Adj. EBITDA, and a loss of post-paid handset subs. AT&T remains focused on shifting the base away from subsidies, but we wait to see for how long they can suffer consumer share loss. Wireline revenue was basically in line with expectations, but EBITDA was 3% better than forecast owing to lower costs; the margin of 27.6% was 100bp better than expected and the first sequential expansion since 2Q12. We cut our 2015 revenue and Adj. EBITDA estimates on lower average revenue per user (ARPU) in Wireless and slower Consumer Wireline growth."

The firm moved FY15E EPS from $2.49 to $2.52 and FY16E EPS from $2.70 to $2.57.

For an analyst ratings summary and ratings history on AT&T click here. For more ratings news on AT&T click here.

Shares of AT&T closed at $32.81 yesterday.

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