AT&T Inc. (NYSE:T) is anticipated to post its third-quarter print October 25th. Nomura analyst Jeff Kvaal forecasts “mixed” results ahead, as though iPhone promos have real potential to drive net adds and “DTV Now should be compelling,” the analyst also recognizes that “both offer risks to margins.”

Nonetheless, Kvaal overall remains positive on the telecommunications giant’s long-term prospects, despite the “moving pieces in 3Q” and therefore reiterates a Buy rating on T with a price target of $46, which represents an 18% increase from where the shares last closed.

The analyst conservatively forecasts EPS of $0.71, expecting it to “likely prove low” when pointing to $0.02 to $0.03 of depreciation. As far as a $0.74 upside to the Street, Kvaal considers this “unlikely given margin pressure.”

Though Kvaal expects “margin volatility” surrounding his prediction for “robust” long-term free cash flow growth, the analyst also believes “much of this is likely priced in given the recent retrenchment in the shares.” In the bigger picture, the analyst has confidence AT&T can “balance margin pressure with cost reductions” and in light of this, expects both fiscal year 2017 consensus free cash flow coupled with EPS to rise up toward Kvaal’s high-end projection. By 2020, Kvaal predicts free cash flow will hit $23 billion from his estimate of $15.9 billion in 2015, adding that this estimate already reflects a $1 billion reduction in free cash flow related to “OTT cannibalization.”

Additionally, the analyst anticipates AT&T will record postpaid phone losses of about 200,000 for this quarter, which from Kvaal’s perspective “compares favorably” when looking to this quarter last year when the company recorded 383,000 losses.

The analyst asserts, “AT&T likely will price DTV Now ‘very aggressively,’ as it is comfortable with thinner margins, somewhat offset by lower capex. […] We expect minimal cannibalization near term given the differentiation between DTV Now and Everywhere App. Longer term we estimate a $1bn reduction in 2020 FCF due to DTVNow cannibalization.”

“At current levels, investors are assuming zero dividend growth over the next several years, despite a 30-year track record of growth,” Kvaal concludes.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Jeff Kvaal is ranked #320 out of 4,190 analysts. Kvaal has a 62% success rate and realizes 11.5% in his yearly returns. When recommending T, Kvaal garners 11.5% in average profits on the stock.

TipRanks analytics indicate T as a Buy. Based on 20 analysts polled in the last 3 months, 12 rate a Buy on T, while 8 maintain a Hold. The consensus price target stands at $4.83, marking a nearly 15% upside from where the stock is currently trading.