AT&T shares gain the most in 21 months on Monday, third-quarter profit beats, company announces three-year financial guidance

AT&T Inc’s third-quarter earnings, reported on Monday, topped Wall Street estimates, while operating revenue fell short of market expectations.

The US wireless carrier added more mobile phone subscribers paying a monthly bill than anticipated during the latest quarter, as it bundled media content with phone plans.

The company also announced a three-year strategic plan, which envisages the addition of two new members to its board and the monetization of up to $10 billion worth of non-strategic assets in 2020.

AT&T shares closed higher for a second consecutive trading session in New York on Monday. It has also been the sharpest daily surge since February 1st 2018. The stock went up 4.28% ($1.58) to $38.49, after touching an intraday high at $38.86, or a price level not seen since February 2nd 2018 ($39.04).

Shares of AT&T Inc have risen 34.86% so far in 2019 compared with a 21.24% gain for the benchmark index, S&P 500 (SPX).

In 2018, AT&T Inc’s stock went down 26.59%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

Total operating revenue went down 2.5% year-on-year to $44.59 billion during the quarter ended on September 30th, while falling short of the median analyst estimate of $45.1 billion.

Revenue from AT&T’s WarnerMedia, which encompasses premium TV channel HBO and Turner, was reported at $7.85 billion during the period, or missing the market consensus estimate of $8.28 billion. HBO Max, WarnerMedia’s new streaming service, is due to be launched in the spring of 2020.

The telecoms giant reported a net postpaid phone subscriber growth of 101 000 during the third quarter. In comparison, analysts on average had expected an increase by 61 000 subscribers.

Meanwhile, net income attributable to shareholders shrank to $3.7 billion ($0.50 per share) during the third quarter from $4.7 billion ($0.65 per share) in the year-ago period.

Earnings per share, which exclude special items, were reported at $0.94 during the latest quarter, while exceeding a consensus of estimates of $0.93 per share.

According to AT&T’s three-year financial outlook, its adjusted earnings are expected to fall within the range of $3.60 to $3.70 per share in 2020 and within the range of $4.50 to $4.80 per share by 2022.

The company also said it projected consolidated revenue growth of 1% to 2% per year and an adjusted EBITDA margin of 35% by 2022 (or 200 basis points above 2019 levels).

Analyst stock price forecast and recommendation

According to CNN Money, the 23 analysts, offering 12-month forecasts regarding AT&T Inc’s stock price, have a median target of $38.00, with a high estimate of $43.00 and a low estimate of $20.00. The median estimate represents a 1.27% downside compared to the closing price of $38.49 on October 28th.

The same media also reported that at least 14 out of 27 surveyed investment analysts had rated AT&T Inc’s stock as “Hold”, while 10 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.