UPDATE: Oppenheimer Downgrades AT&T (T) to Perform
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(Updated - November 8, 2016 9:44 AM EST)
"We are downgrading T from Outperform to Perform and removing our $46 PT as we believe CTL's dividend is relatively more attractive (which on a pro forma basis will be at a 9% yield/68% payout ratio to FCF, vs. 5% and 60% for T); we also see the TWX merger as facing higher regulatory hurtles and taking more like 15 months to complete vs. 9 for CTL/LVLT. T is also facing some wireless headwinds in the next year," said Horan.
"We continue to expect that T will be successful in acquiring TWX, but see the process taking 15 months as conditions are negotiated. We see the DOJ suing DTV over the Dodgers as a ominous sign. Also, the FCC may initiate a formal review with an eye towards its Zero Rating policy. Regardless, T's stock tends to take a pause when the company is in the process of closing on a major acquisition, and we suspect a similar outcome and see a better opportunity in CTL currently," added the analyst.
Shares of AT&T closed at $36.81 yesterday.
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