Oppenheimer Says AT&T (T) is Undervalued; Raises Price Target to $40

Oppenheimer reiterates an Outperform rating on AT&T (NYSE: T), and raised the price target to $40.00 (from $36.00), after adjusting estimates. Analyst Timothy Horan believes that cross selling and new services can drive improved FCF growth vs. previous estimates and that wireless pricing is set to improve.

Horan commented, "We have updated our pro forma model with DTV and T's international wireless operations, and believe T stock looks undervalued. We believe that cross selling and new services can drive improved FCF growth vs. our previous estimates and that wireless pricing is set to improve, with S/TMUS poised to pull back on unlimited data. In addition, now that AT&T is winding down Project VIP, we forecast greater FCF generation, which makes the dividend yield look attractive. Last, with TMUS introducing a device leasing option, we believe the incumbents may respond, which could provide a near-term EBITDA lift. We are raising our price target on AT&T to $40 from $36, at which price it would trade at 6.5x 2016E pro forma EBITDA with a 4.7% dividend yield."

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 $35.52 yesterday.

You May Also Be Interested In

• Midday movers: Tesla, Boeing rise; Uber, Old Dominion Freight fall
• Jefferies Downgrades Calix (CALX) to Hold
• JPMorgan Downgrades Monster Beverage (MNST) to Neutral