Stock Update (NYSE:T): AT&T Inc. Reports First Quarter Results

AT&T Inc. (NYSE:T) reported strong revenue, adjusted operating margin, adjusted EPS and free cash flow growth for the first quarter.

“It was a good start to the year. We had solid financial results and executed well on our strategy to be the premier integrated communications provider for businesses and consumers,” said Randall Stephenson, AT&T chairman and CEO. “We’re seeing good momentum with our initial integrated wireless, video and broadband offers. And we’ll expand the integrated choices for customers in the fourth quarter when we launch our new video streaming services.”

“Our consolidated revenues, adjusted earnings and free cash flow continue to grow as margins continue to expand. And we’re putting up these numbers even as we invest in building our Mexico wireless business. In addition, DIRECTV merger synergies are on track to reach $1.5 billion or better by the end of the year.”

Consolidated Financial Results

AT&T’s consolidated revenues for the first quarter totaled $40.5 billion, up more than 24% versus the year-earlier period largely due to the July 24, 2015 acquisition of DIRECTV. Compared with results for the first quarter of 2015, operating expenses were $33.4 billion versus $27.0 billion; operating income was $7.1 billion versus $5.6 billion; and operating income margin was 17.6% versus 17.1%. When adjusting for amortization, merger- and integration-related costs and other expenses and a gain on spectrum transfers, operating income was $8.1 billion versus $6.1 billion; and operating income margin was 19.9%, up 110 basis points from a year ago.

First-quarter net income attributable to AT&T totaled $3.8 billion, or $0.61 per diluted share, compared to $3.3 billion, or $0.63 per diluted share, in the year-ago quarter. Adjusting for the $0.17 of costs for merger- and integration-related expenses and amortization, $0.02 of other costs and the $0.08 gain on spectrum transfers, earnings per diluted share was $0.72 compared to an adjusted $0.65 in the year-ago quarter, an increase of 10.8%.

Cash from operating activities was $7.9 billion in the first quarter, and capital investment1 totaled $4.7 billion. Free cash flow — cash from operating activities minus capital expenditures — was $3.2 billion, up 17% year over year. (Original Source)

Shares of AT&T are down nearly 2% to $37.45 in after-hours trading. T has a 1-year high of $39.72 and a 1-year low of $30.97. The stock’s 50-day moving average is $38.35 and its 200-day moving average is $35.03.

On the ratings front, AT&T has been the subject of a number of recent research reports. In a report issued on April 19, Nomura analyst Jeff Kvaal reiterated a Buy rating on T, with a price target of $44, which represents a potential upside of 15.5% from where the stock is currently trading. Separately, on the same day, Morgan Stanley’s Simon Flannery reiterated a Hold rating on the stock and has a price target of $35.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeff Kvaal and Simon Flannery have a total average return of 8.3% and 9.1% respectively. Kvaal has a success rate of 49.4% and is ranked #517 out of 3829 analysts, while Flannery has a success rate of 69.8% and is ranked #397.

The street is mostly Bullish on T stock. Out of 11 analysts who cover the stock, 9 suggest a Buy rating , one suggests a Sell and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $41.00, which implies an upside of 7.6% from current levels.

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