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AT&T Raises Global HBO Max and HBO Subscribers Forecast, Shares Gain Over 4%

By:
Vivek Kumar
Updated: Apr 18, 2022, 07:20 UTC

AT&T raised its forecasts for global HBO Max and HBO subscribers to 120-150 million from the previous projection of 75-90 million, sending its shares up over 4% on Friday.

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AT&T raised its forecasts for global HBO Max and HBO subscribers to 120-150 million from the previous projection of 75-90 million, sending its shares up over 4% on Friday.

The company forecasts to launch HBO Max in 60 markets outside the United States in 2021 and expects to launch in the U.S. market an advertising-supported (AVOD) version of HBO Max in June.

This year, the wireless company is planning to increase its fiber footprint by an extra 3 million customer locations across more than 90 metro areas.

Following this, AT&T shares, which slumped around 26% in 2020, rose over 4% to $30.84 on Friday.

Analyst Comments

“While revenues are expected to double over 5 years, profitability will be a focus with dilution peaking in 2022 and breakeven targeted by 2025. AT&T also committed to deploying their new C-Band spectrum starting later this year with 2021 gross capex (and overall guidance) reiterated at $21bn, and called out $6-8bn in capex over 2022-24, at this point it’s not clear whether this is incremental to the current run rate (as at Verizon). AT&T also committed to building past another 3m fiber locations this year,” said Simon Flannery, equity analyst at Morgan Stanley.

“AT&T’s new leverage target is 2.5x or lower by 2024, down from an estimated 3.0x at the end of 2021. We will be looking for more color around free cash flow generation and dividend payout over the next several years, particularly with the impact of the DTV transaction which is set to close in 2H21. This deal should improve top-line trends by 100bp and margins by 300bp although the unit generated some $4bn in free cash flow annually. The company did not provide longer-term revenue or EBITDA growth targets in the release, but we may get more color during the event.”

AT&T Stock Price Forecast

Eleven analysts who offered stock ratings for AT&T in the last three months forecast the average price in 12 months of $31.88 with a high forecast of $38.00 and a low forecast of $24.00.

The average price target represents a 4.70% increase from the last price of $30.45. Of those eleven analysts, four rated “Buy”, six rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $34 with a high of $46 under a bull scenario and $26 under the worst-case scenario. The firm gave an “Equal-weight” rating on the wireless company’s stock.

“Valuations near multi-year lows already reflect company and industry concerns. Return to wireless service revenue growth with Firstnet and nationwide 5G rollout in 1H20. Potential industry consolidation provides upside opportunities. A dividend payout ratio in the 60s is sustainable in the medium term, buybacks possible as deleveraging continues,” said Morgan Stanley’s Flannery.

Several other analysts have also updated their stock outlook. Scotiabank raised the target price to $28 from $27.5. Deutsche Bank lowered the price target to $31 from $36. Independent Research increased the target price to $29.00 from $27.00 and gave a hold rating. Citigroup cut the price target to $34 from $36. JP Morgan lowered the target price to $32 from $34.

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About the Author

Vivek has over five years of experience in working for the financial market as a strategist and economist.

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