AT&T (T) Targets Big Red (VZ) with New Pricing; Analyst Comments (S) (TMUS)
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Price: $16.52 +1.29%
Rating Summary:
20 Buy, 29 Hold, 2 Sell
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Up: 15 | Down: 11 | New: 13
Rating Summary:
20 Buy, 29 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 15 | Down: 11 | New: 13
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Over the weekend, AT&T (NYSE: T) announced pricing changes. In the view of analyst Jennifer M. Fritzsche of Wells Fargo, the change is more targeted at Verizon (NYSE: VZ) vs Sprint (NYSE: S) or T-Mobile (NYSE: TMUS).
"T is essentially altering its Mobile Share Value plans (announced in December, 2013) to target the family plan users. Specifically, the company is offering 4 smartphone family lines for $160/month. This includes 10GB of data and higher (note: plan only valid at a minimum of 10GB of data). The fine print (AKA catch) is that these users must be on the Next plan or bring your own device. T is allowing the base to migrate over to this price even if they are on contract, but lose the lower price if - they upgrade on a subsidized device. These plans essentially lower the unlimited voice/text element of a smartphone from $25 to $15/month, and a feature phone from $20 to $15/month)," said Fritzsche.
"It is too soon to see if others react. With these plans T is still at a premium to S and TMUS, but a clear discount to VZ. Big Red (VZ) will be the one to watch, in our view as they have been on record saying it would react to price moves if they felt the need. Interestingly (and perhaps somewhat surprisingly), a careful read of the AT&T press release would suggest that AT&T is targeting this change more at VZ than at TMUS (or S) [Specifically, TMUS mentioned only 2x in press release vs. 5x for Verizon). We do not see an immediate need to adjust numbers on our AT&T outlook based on this move, but will be carefully tracking early take rates and competitive responses," she added.
Fritzsche noted that the impact of the plan was included in AT&T's 2014 guidance.
Wells Fargo has an Outperform rating on AT&T with a price target of $42-$44.
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 $33.32 yesterday.
"T is essentially altering its Mobile Share Value plans (announced in December, 2013) to target the family plan users. Specifically, the company is offering 4 smartphone family lines for $160/month. This includes 10GB of data and higher (note: plan only valid at a minimum of 10GB of data). The fine print (AKA catch) is that these users must be on the Next plan or bring your own device. T is allowing the base to migrate over to this price even if they are on contract, but lose the lower price if - they upgrade on a subsidized device. These plans essentially lower the unlimited voice/text element of a smartphone from $25 to $15/month, and a feature phone from $20 to $15/month)," said Fritzsche.
"It is too soon to see if others react. With these plans T is still at a premium to S and TMUS, but a clear discount to VZ. Big Red (VZ) will be the one to watch, in our view as they have been on record saying it would react to price moves if they felt the need. Interestingly (and perhaps somewhat surprisingly), a careful read of the AT&T press release would suggest that AT&T is targeting this change more at VZ than at TMUS (or S) [Specifically, TMUS mentioned only 2x in press release vs. 5x for Verizon). We do not see an immediate need to adjust numbers on our AT&T outlook based on this move, but will be carefully tracking early take rates and competitive responses," she added.
Fritzsche noted that the impact of the plan was included in AT&T's 2014 guidance.
Wells Fargo has an Outperform rating on AT&T with a price target of $42-$44.
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 $33.32 yesterday.
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