What This Key Analyst Is Saying About AT&T Ahead of Earnings

By Chris Lange Updated Jan 30, 3:01PM EST · Published Oct 4, 12:55PM EDT

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AT&T Inc. (NYSE: T | T Price Prediction) is scheduled to report its earnings in the coming weeks, and one analyst is getting out in front of the curve and issuing a call ahead of the results.

Nomura Instinet reiterated a Buy rating with a $43 price target, implying upside of 15.6% from the most recent closing price of $37.19.

The firm expects third-quarter results to be more positive than not. Nomura noted that AT&T’s reticence to match Verizon’s price cut implies confidence in wireless, and activist firm Elliott Management may speed cost savings and asset sales.

Nomura believes that a letter from Elliott may spur a bit more cost savings and asset sales. That letter to the AT&T board calls for changes in management, as well as a new strategy for the Wireless division. Elliott hopes to raise EBITDA margins by $5 billion by trimming SG&A, real estate and network operations. While much of Elliott’s plan is consistent with AT&T’s existing strategy, Elliott’s involvement may speed progress. Nomura does not expect AT&T to divest DirecTV.

The one-time video subscriber impact of carriage disputes with CBS and Nextstar could be about 300,000. Nomura now models a million video subscriber losses (consensus estimates are calling for 900,000), although it believes EBITDA stability remains on track.

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In the report, Nomura commented on AT&T’s competition:

We reduce our WM EBITDA estimate to better reflect difficult comps with 3Q18’s Crazy Rich Asians. AT&T has yet to disclose HBO Max pricing; we expect it to be higher than Netflix or Disney+. In contrast to Disney (but like Comcast), AT&T will not pull all content from third-party OTT providers. We expect specific detail on the DTC offering and strategy at WarnerMedia’s analyst day on October 29.

For the third quarter, consensus estimates are calling for $0.93 in EPS and $45.17 billion in revenue. The same period of last year reportedly had $0.90 in EPS and $45.74 billion in revenue.

Shares of AT&T were trading at $37.30 on Friday, in a 52-week range of $26.80 to $38.75.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.