By Senad Karaahmetovic
A Barclays analyst downgraded AT&T (NYSE:T) to Equal Weight from Overweight with a price target of $20 per share (down from $22).
The rating cut comes after AT&T yesterday lowered its full-year free cash flow forecast to $14 billion from $16 billion.
“AT&T’s results, while being impacted to some extent by the macro backdrop, are likely to renew concerns about management credibility. AT&T’s forward commentary may also fuel broader concerns about industry growth visibility in the coming quarters. While macro impacts will likely show up across the industry, we believe these impacts may not be uniform with TMUS trends potentially outperforming others,” the analyst told clients in a note.
He described the forward commentary about the rest of ‘23 cash flow as “squishy”.
“If anything, visibility may worsen if were to head into a recession,” he added.
The analyst reminded investors that the biggest pushback against AT&T is the actual execution. Yesterday’s results won’t fare well for the management after it has cut guidance within 4 months of giving it.
“AT&T seems to be back in the same place that it started with respect to concerns about its dividend sustainability and management credibility,” he added.
T stock price is down over 1% today.