AT&T (T) Update

26Q1 Non-GAAP EPS Beats Consensus.  Lowering PT to $24 after Sell-Off but Raising Rating to Buy.

AT&T reported 26Q1 GAAP EPS of $0.55, compared with $0.61 in the prior year period.  Non-GAAP EPS of $0.55 was up from $0.51.  I had projected GAAP EPS of $0.61 and non-GAAP EPS of $0.62.  The YOY drop in earnings was primarily due to the loss of equity in net income of affiliates after the sale of AT&T’s interest in DIRECTV in 25Q1.  I had also expected lower SG&A expense and a lower tax rate.

On Feb. 2, AT&T acquired substantially all of Lumen’s Mass Markets fiber business for $5.76 billion.  The company placed the acquired fiber network in a wholly owned subsidiary called Forged Fiber, which it is carrying as held-for-sale in anticipation of selling a majority stake in the subsidiary to a private equity firm later this year.  Results of Forged Fiber are now classified as discontinued operations.

AT&T expects to close its acquisition of acquisition of EchoStar’s spectrum licenses in the 600 MHz band and the 3.45 GHz ban for $23 billion soon.  I am assuming that the acquisition will take place in 26Q3.  The FCC gave its final approval for the transaction in May.  AT&T has already deployed some of that spectrum through a lease agreement with Echostar.  It expects that the acquisition will help improve its wireless service quality in certain markets and facilitate the growth of AT&T Internet Air.  The acquisition is expected to raise AT&T’s leverage from 2.7 times net debt to adjusted EBITDA to 3.2 times; but the company aims to reduce its leverage to 2.5 times within three years.

Despite the lower than anticipated 26Q1 earnings, management left its 2026 full year guidance mostly unchanged.  It anticipates consolidated service revenues to rise by a low single-digit percentage, adjusted EPS of $2.25-$2.35, capital investment of $23-$24 billion and free cash flow of more than $18 billion.

My 2026 projections are consistent with guidance.  I anticipate GAAP EPS of $2.28 and non-GAAP EPS of $2.33.  For 2027, I project GAAP EPS of $2.42 and non-GAAP EPS of $2.45.  The non-GAAP growth rate of 5.2% is below management’s long-term guidance of double-digit growth through 2028.

After reaching an intraday high of $29.43 on March 24, AT&T stock has fallen sharply to a low of $19.89 on July 2, a decline of 32.4%. YTD, the stock has a negative total return of -10.6%, compared with the S&P 500’s positive total return of 11.3%.  Since reaching its July 2 low, the stock has recovered a bit, closing yesterday at $21.43.

As a result of the fall in AT&T’s share price, I have lowered my price target from $27 to $24.  The price target equates to an assumed forward multiple of 9.8 times projected 2027 non-GAAP EPS of $2.45.  The potential total return, with its 5.2% dividend yield, is 17.2%.  Thus, I am raising my performance rating from “2” (Outperform) to “1” (Buy).  My projections are given below.  I will have more to say after the company reports 26Q2 results on July 22.

This is a summary of my recent update report on AT&T Inc. (T). To obtain a copy of the report, please reach out to me using the contact information provided below.

July 16, 2026 (Report published on July 16, 2026.)

Stephen P. Percoco
Lark Research
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Linden, New Jersey 07036
(908) 975-0250
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© 2015-2026 by Stephen P. Percoco, Lark Research.   All rights reserved.

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