AT&T has become a darling on Wall Street ahead of the upcoming earnings cycle. Just two days after Goldman Sachs named AT&T its top telecom pick, JPMorgan Chase reiterated that it is one of its best ideas. JPMorgan analyst Sebastiano Petti calls AT&T a “value pick” more broadly because of the company’s current valuation discount relative to the rest of the industry. Petty maintained an Overweight rating on the stock with a price target of $24, which would imply an upside of more than 11% from Tuesday’s closing price. Petti added that AT&T is positioning itself for long-term growth as it continues to add fiber optics to its broadband business. “Despite recent fiber M&A, we like AT&T’s enhanced organic fiber opportunity through joint ventures and open access partnerships,” Petty said in a note on Wednesday. Petty and Goldman Sachs analyst James Schnee Dedu highlighted potential share buyback announcements as a positive catalyst for the stock market. “Given our view on the company’s latest capital allocation, we are tactically most constructive on T and we expect a buyback may be announced,” Schneider wrote in a research note on Monday. “We expect the wireless business to gain Positive results, and the possibility of a capital allocation announcement and buyback initiation. Management commentary during the conference was generally bullish on the company, and we feel the company’s view on wireless trends is not declining. AT&T also has a high dividend and a yield of 5.1%. This is well above the S&P 500 average of 1.3%. “AT&T is increasing capital investment spending on 5G and we expect solid free cash flow generation to support dividend payments and reduce debt,” JPMorgan’s Petty said. The stock has gained 29.1% so far this year.
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