Bernstein cuts AT&T rating, says SpaceX will fuel prolonged investor debate

Investing.com -- Bernstein downgraded AT&T to Market Perform and adjusted price targets across telecom and cable in a recent note, citing competitive pressure from SpaceX’s push into broadband and wireless.

Analyst Laurent Yoon said the downgrade and price target change to $24 from $25 does not reflect a meaningful change to estimates. Instead, it reflects what he expects to be a drawn-out debate over Starlink’s impact as its broadband capacity expands.

“In the current environment, we find it increasingly difficult to justify an Outperform rating on incumbent operators, even at discounted prices, as volatility seems inevitable,” Yoon wrote.

SpaceX recently deployed the first batch of Starlink V3 satellites, marking the start of what Bernstein expects to be a significant capacity expansion. Starlink’s broadband subscriber base has roughly doubled annually over the past four years.

Yoon said SpaceX’s acquisition of low-band spectrum has added to negative sentiment. He noted that 14 megahertz is not enough to alter the competitive landscape for now.

“The real question is not what SpaceX can do with this spectrum today, but what it could do next and what investors believe it ultimately intends to do,” he said.

The analyst does not see Starlink as a direct threat to fiber. However, if it competes more aggressively, fixed wireless providers would likely respond, forcing cable operators to defend the value segment that makes up 30% to 40% of their subscriber base. Fiber operators could eventually follow.

Bernstein said recent offers already suggest competition is increasingly centered on value, leaving operators struggling to maximize both pricing and volume in a saturated market.

Elsewhere, Verizon’s price target was cut to $45 from $47, T-Mobile’s to $180 from $220, and Comcast’s to $23 from $28. All of the names are Market Perform-rated.

Original Article

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