Deutsche Bank Resumes Coverage on AT&T (T) at Hold; Strategic Uncertainty vs. Strong Liquidity...Are Buybacks the Next Catalyst?
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Price: $24.89 +1.26%
Rating Summary:
25 Buy, 27 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
25 Buy, 27 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Deutsche Bank resumes coverage on AT&T (NYSE: T) with a Hold. PT $32.00.
Deutsche analyst says, "Our neutral view reflects concerns about ongoing pressures to wireless margins due to high smartphone subsidies and strategic uncertainty following T's decision to terminate its bid for T-Mobile. With the dividend yield (5.9%) at a 20-year high vs. the 10-yr Treasury, the stock looks compelling on a yield basis. But, we are staying on the sidelines until we have better visibility on margin expansion in wireless and uses of T's abundant liquidity (buybacks? spectrum? M&A?)."
"Media reports suggest T may look to acquire Dish Network (Nasdaq: DISH) as a source of spectrum. While DISH may hold licenses that are attractive to T, there are a number of regulatory issues that complicate this deal. Further, T does not have an immediate need for more spectrum (although it eventually needs more). So, its near-term spectrum move may be to do nothing. This would create room for T to deploy its abundant liquidity on other initiatives with buybacks being the most likely, in our view. We estimate that T could buy back most of its authorized 300M share program ($8B, 5% of market cap) by YE13, although we may not see anything until 2H12. Buybacks could boost T's EPS CAGRe (’11-’13) by 150 bps (8.8% vs. 7.3%)."
Key Estimates: 4Q11: Rev $32B, EPS $0.45, post paid NAs 650k, wireless EBITDA mgn 31.5%. 2012: Rev $128B, EPS $2.44, post paid NAs 1.35M, wireless EBITDA mgn 39.2%.
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 $29.66 yesterday.
Deutsche analyst says, "Our neutral view reflects concerns about ongoing pressures to wireless margins due to high smartphone subsidies and strategic uncertainty following T's decision to terminate its bid for T-Mobile. With the dividend yield (5.9%) at a 20-year high vs. the 10-yr Treasury, the stock looks compelling on a yield basis. But, we are staying on the sidelines until we have better visibility on margin expansion in wireless and uses of T's abundant liquidity (buybacks? spectrum? M&A?)."
"Media reports suggest T may look to acquire Dish Network (Nasdaq: DISH) as a source of spectrum. While DISH may hold licenses that are attractive to T, there are a number of regulatory issues that complicate this deal. Further, T does not have an immediate need for more spectrum (although it eventually needs more). So, its near-term spectrum move may be to do nothing. This would create room for T to deploy its abundant liquidity on other initiatives with buybacks being the most likely, in our view. We estimate that T could buy back most of its authorized 300M share program ($8B, 5% of market cap) by YE13, although we may not see anything until 2H12. Buybacks could boost T's EPS CAGRe (’11-’13) by 150 bps (8.8% vs. 7.3%)."
Key Estimates: 4Q11: Rev $32B, EPS $0.45, post paid NAs 650k, wireless EBITDA mgn 31.5%. 2012: Rev $128B, EPS $2.44, post paid NAs 1.35M, wireless EBITDA mgn 39.2%.
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 $29.66 yesterday.
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