FBR Remains Sidelined on AT&T Inc. (T) Following 2Q:16 Results

In a research report issued today, FBR analyst David Dixon reiterated a Market Perform rating on shares of AT&T Inc. (NYSE:T), while raising the price target to $42 (from $38), after the telecom giant reported largely in-line second-quarter financial results and mixed subscriber results. AT&T shares are currently trading at $3.31, up $0.79 or 1.86%.

Dixon wrote, “While the LatAm macroeconomic environment is expected to remain challenging, we expect the upcoming Rio Olympics to build on recent subscriber momentum. In the U.S., total 2Q net adds of 1.36M were meaningfully below consensus of 1.78M. Management attributed net add weakness to the planned shutdown of the 2G network and a network outage caused by an equipment vendor. We believe the domestic net add weakness is more likely a result of shifting focus on profitability rather than subscriber count. We think T is challenged by TMUS for the low-end customer and is focused on maintaining share of the more profitable enterprise market as well as improving ARPU in the interim, ahead of TMUS facing capacity challenges in the coming one to two years, based on our vendor checks.”

Bottom line: “We believe T will benefit from the Olympics through cross-selling DIRECTV products in Latin America, partially offset by continued competition in the U.S. carrier market.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst David Dixon has a yearly average return of 11.5% and a 59% success rate. Dixon has a average return when recommending T, and is ranked #535 out of 4075 analysts.

Out of the 23 analysts polled by TipRanks, 17 rate At&t Inc stock a Buy, 5 rate the stock a Hold and 1 recommends Sell. With a downside potential of 1.1%, the stock’s consensus target price stands at $42.88.

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