AT&T stock jumps after J.P. Morgan turns bullish, citing valuation in wake of WarnerMedia spinoff

Shares of AT&T Inc.
T,
+7.74%
hiked up 4.1% in premarket trading Monday, after J.P. Morgan analyst Philip Cusick turned bullish on the telecommunications and media giant, citing an “attractive” valuation. Cusick effectively upgraded AT&T by resuming coverage with a overweight rating after nearly a year of restriction, up from his previous rating of neutral. He set a $22 stock price target, which implies about 21% upside from Friday’s closing price of $18.22. The upgrade comes after AT&T spun off last week its WarnerMedia business in a deal with Discovery Inc., with the new company set to trade Monday as WarnerBros. Discovery Inc.
WBD,
+1.27%.
Cusick said the spinoff helps AT&T management focus on its wireless business and on growing its broadband offerings. While he’s a “wary” on the wireless industry overall, he believes at Friday’s close AT&T shares “seem like an attractive risk/reward and we believe investors should look to capture this discount before it closes.” The stock has dropped 25.9% year to date, while the SPDR Communication Services Select Sector ETF
XLC,
-1.29%
has lost 12.4% and the S&P 500
SPX,
-1.69%
has declined 5.8%.