AT&T (NYSE:T) is coming off a tough year. Its shares have taken a hit, and management is rethinking its strategy. That is taking a toll on T stock, which is down 14% in the past year.
AT&T is one of the largest telecommunications companies in the United States of America. However, the company made a misstep with its often-frenzied merger activity. Nevertheless, it has now made the changes to streamline its business. The telecom company is now investing heavily in 5G, fiber and other key growth areas.
At the same time, it no longer has the ambition to become an entertainment conglomerate. To focus on 5G, the company has decided to divest WarnerMedia. This has left WarnerMedia to combine with Discovery and trade as a separate stock on the Nasdaq, which went public on April 11 as Warner Bros. Discovery (NASDAQ:WBD).
Therefore, the next few days will shine a new light on where T stock is headed. Investors will be keenly waiting for information regarding wireless postpaid net adds and the newly minted entertainment conglomerate.
These companies have different ambitions and will chart unique paths to achieving their goals. For the last two years, AT&T has done very well building the number of new postpaid wireless subscriptions. Last year was a good one for the company, as the service reportedly hit 3.2 million new subscribers — more than the number added over the previous ten years combined. The metric is a bit more important now because of the recent spinoff of its media enterprise.
Before the market opens on April 21, AT&T will report its first-quarter 2022 earnings. These will be essential to gauge how the company will progress as a dividend-paying telecom.
What Do Analysts Expect From T Stock?
When AT&T reported its Q4 2021 earnings, it beat analysts’ forecasts for earnings and revenue. Adjusted EPS rose 4%, but revenue fell 10.4% year over year (YOY).
If we look at the data, analyst estimates are for the company’s adjusted earnings per share (EPS) to fall for the first time in four quarters. Experts are also predicting a drop in revenue for the third consecutive quarter. In Q1, analysts expect the number of wireless postpaid customers adding service to slow down from the year-ago period. The forecasted loss might have something to do with this being a traditionally slower period for new customer signups.
Regardless, investors will want more color on where the company is headed next. AT&T has done a lot of grunt work to decrease its debt load and move forward as a streamlined enterprise after disastrous mergers in recent years. Although it has slashed its dividend by approximately half, the payout is still handsome, with an exceptional yield of 5.7%.
At the same time, sentiment on Wall Street is decidedly bullish regarding T stock. According to TipRanks data, shares have a moderate buy consensus rating, based on 10 “buys,” six “holds” and one “sell.” The average price target of $25.08 implies an upside of 29% versus the last recorded price.
Just because the company’s latest report might differ from market expectations regarding its financial results, there is nothing to be interested in beyond earnings. Therefore, it will be an interesting couple of days for AT&T; I rate T stock a hold.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
