AT&T (T) 24Q1 Update

AT&T reported 24Q1 GAAP EPS of $0.47, compared with last year’s loss of $0.57.  My estimate was $0.47.  Non-GAAP EPS was $0.55, below last year’s $0.50, but above my estimate of $0.53.  Free cash flow was $3.1 billion in the quarter, above 23Q1’s $1.0 billion and my estimate of $1.8 billion.

Management reaffirmed its 2024 non-GAAP EPS guidance range of $2.15-$2.25.  With the quarter’s gives and takes, I have raised my 2024 GAAP EPS estimate a tad from $2.05 to $2.07 and my non-GAAP estimate from $2.20 to $2.22.  For 2025, I now expect GAAP EPS of $2.26, up from $2.21, and non-GAAP EPS of $2.40 vs. $2.34.

Since my last report on March 12, the stock has outperformed the market, with a total return of zero, compared with the S&P 500’s -2.9%.  Year to date, the stock has delivered a total return of 4.2%, below the S&P 500’s 5.7% total return.  To my eye, AT&T’s weekly chart suggests that the stock is rolling over, struggling to hold on to its uptrend from last October’s bottom.  The stock’s technical trend is similar to that of the broader market.

Despite the ominous-looking chart, I am keeping my price target at $19.  That price target equates to a forward multiple of 8.4 times projected 2025 GAAP EPS of $2.26 (or 7.9 times projected 2025 non-GAAP EPS of $2.40).  That represents a potential 12-month return of 19%, including its 6.6% dividend yield.  Consequently, I am maintaining my performance rating of “1” (Buy) on AT&T’s stock. Key risks include the continued financial health of AT&T’s customers, U.S. consumers and businesses, and potential disruptions to the economy perhaps through unforeseen events such as cyberattacks.  (Besides the half-day wireless service disruption that the company and its customers suffered in February, AT&T reported another large data breach in March.)  Although revenue growth expectations are modest in 2024, the company’s guidance of 7% growth in broadband revenues looks aggressive, especially given the modest sequential growth reported in 24Q1.  My 24Q2 EPS estimates are at the high end of consensus.

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

May 15, 2024 (Report originally published on May 1, 2024.)

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250

© 2015-2024 by Stephen P. Percoco, Lark Research.   All rights reserved.

This blog post (as with all posts on this website) represents the opinion of Lark Research based upon its own independent research and supporting information obtained from various sources. Although Lark Research believes these sources to be reliable, it has not independently confirmed their accuracy. Consequently, this blog post may contain errors and omissions. Furthermore, this blog post is a summary of a recent report published on this subject and that report provides a more complete discussion and assessment of the risks and opportunities of any investment securities discussed herein. No representation or warranty is expressed or implied by the publication of this blog post. This blog post is for informational purposes only and shall not be construed as investment advice that meets the specific needs of any investor. Investors should, in consultation with their financial advisers, determine the suitability of the post’s recommendations, if any, to their own specific circumstances. Lark Research is not registered as an investment adviser with the Securities and Exchange Commission, pursuant to exemptions provided in the Investment Company Act of 1940. This blog post remains the property of Lark Research and may not be reproduced, copied or similarly disseminated, in whole or in part, without its prior written consent.

This entry was posted in T, Telecommunications and tagged , . Bookmark the permalink.