AT&T Inc. (NYSE: T) shares have weakened more than 5% since the beginning of the 2022 year, even though the company reported solid fourth-quarter results in January.
Morgan Stanley has a positive view of AT&T
AT&T shares continue to trade near their lowest point since the global financial crisis after communications chief Jeff McElfresh raised new concerns about user growth in the wireless industry.
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The company reported fourth-quarter results at the end of January; total revenue has decreased by 10.3% Y/Y to $41 billion while the non-GAAP EPS was $0.78 (beats by $0.03).
Total revenue has decreased below expectations ( beats by $550 million), and the company’s management said that it expects 2022 consolidated revenue growth in the low-single digits range compared to 2021 consolidated revenues of $153.2 billion.
Adjusted EPS for 2022 should be in the range between $3.10 to $3.15, and it is important to mention that AT&T plans to spend $24 billion on capital investments.
Morgan Stanley has a positive view of the shares of AT&T and reported that the upcoming spin-off of its shares for the Warner Bros. Discovery deal would unlock value in communications. Simon Flannery, an analyst from Morgan Stanley, added:
AT&T and Discovery have set expectations that they can close the $43 billion deal in mid-to-late April. AT&T investors will receive about 0.24 shares in Warner Bros. Discovery (“New Discovery”) on closing, and those shares are currently worth about $6.75 per AT&T share.
Morgan Stanley assigned a buy rating on AT&T shares with a $28 target price which implies more than 15% upside potential. AT&T has a strong position in the market; the company pays an attractive dividend and improves its business for long-term growth and advantage.
The company is targeting a future payout ratio of about 40% of free cash flow, AT&T trades at less than four times TTM EBITDA, and this company could deliver substantial shareholder value for many years to come.
$22 represents current support
AT&T’s stock price has fallen more than 10% after reaching the highest level in 2022 of $27.48 on January 19, and the current share price could be a good entry price for long-term investors.
If the price falls even more in the upcoming period, every price in a range from $22 to $20 could be a very good opportunity to invest in AT&T stock.
Summary
AT&T trades at less than four times TTM EBITDA, and with a market capitalization of $165 billion, shares of this company represent a good value for the long-term investors. Morgan Stanley has a positive view of the shares of AT&T and reported that the upcoming spin-off of its shares for the Warner Bros. Discovery deal would unlock value in communications.
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Source: https://invezz.com/news/2022/03/20/should-i-buy-att-shares-after-a-positive-view-from-morgan-stanley/