Jefferies analyst Mike McCormack reiterated a Buy rating and $40 price target on AT&T (NYSE: T) following earnings saying wireless stability should trump wireline margin weakness.

McCormack commented, "In our view, AT&T's results should dispel bearish fears regarding ARPU and share loss. Though not a standout Wireless quarter, ARPU and margin results should alleviate concerns heading into 4Q. In Wireline, profitability disappointed, though U-Verse was strong, and enterprise growth was encouraging. Some may point to the tempered revenue outlook, though we believe this is less fundamental, and we continue to favor shares of T."

The firm trimmed Q4 EPS from $0.62 to $0.60, FY 2014 EPS from $2.60 to $2.55 and FY 2015 EPS from $2.82 to $2.76.

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Shares of AT&T closed at $34.50 yesterday.