AT&T stock forecast: a good call?

The AT&T stock forecast is a mixed bag. While investment in 5G and streaming is encouraging, the company’s DirectTV business has just suffered a $15.5bn writedown

The AT&T stock forecast isn’t looking all that rosy – with the company candidly admitting that it doesn’t expect much (if any) growth in revenue or profits in 2021. However, some of the figures in its latest quarterly report were rather encouraging.

AT&T stock news revealed that there was “strong momentum” in broadband subscriptions – and there was also solid growth in the number of people who have signed up to the HBO Max streaming service, despite stiff competition from Amazon, Disney, Netflix and others.

One figure that analysts look to when making AT&T share price forecasts is churn – and this refers to the number of customers who are jumping ship to a rival provider. Across its mobile network, this stood at 0.76 per cent in Q4 – the second-lowest figure in its history.

The AT&T stock price forecast is also being helped along by better-than-expected growth at HBO, helped in part by the release of Wonder Woman 1984. Across HBO and HBO Max, total subscriber numbers stood at 41 million – with AT&T’s CEO John Stankey noting this was “a full two years faster than our initial forecast”.

Stankey added:

“We ended the year with strong momentum in our market focus areas of broadband connectivity and software-based entertainment.”

But although AT&T stock predictions are looking up in these new growth areas, COVID-19 has meant other divisions are falling on tough times. Q4 revenues at Warner Media fell to $8.6bn – $900m less than the same period a year earlier.

There was also a painful $15.5bn writedown on the value of its DirectTV business after a staggering 617,000 premium subscribers were lost over this three-month period. Cord-cutting has become a persistent theme in recent years as younger viewers abandon pricy cable plans and rely on cheaper subscriptions to streaming services. This AT&T stock news played a big role in the overall net loss of $13.8bn that was seen in the quarter.

Reports suggest that AT&T might be actively seeking to offload DirecTV as it focuses on innovations such as HBO Max, which Stankey described as its “biggest and single-most important bet” at the moment. The AT&T share price forecast will hinge upon the media giant being able to continue delivering hit TV shows and films that people want to watch – and will involve some aggressive investment as rivals throw billions of dollars at content. HBO’s expenses have surged by 49 per cent this year – and this has subsequently contributed to a 82 per cent drop in HBO’s earnings, which stood at £86m in Q4.

AT&T share price forecast 2021: what to watch

Aside from the alarming drop off in subscriber numbers at DirectTV, AT&T stock projections are going to focus on whether WarnerMedia revenues can recover from a 9.5 per cent slump in revenue that sparked a 10 per cent drop in operating income, down to $2.5bn.

A lot of this will depend on the rollout of coronavirus vaccines around the world. Cinemas remain closed, meaning box office productions are heading to streaming services rather than the big screen. In some regions, filming has also been affected – and there’s also been a noticeable slump in advertising.

One big milestone for the AT&T stock forecast in 2021 will come later in the first quarter, when the company is due to provide investors with a greater insight into its plans for the future.

Another area of concern in the AT&T share price forecast also centres on the levels of debt in the company – with borrowing showing no signs of slowing down. Reports suggest that the telecoms giant is currently attempting to raise $14bn so its network can make the transition to 5G. Although this upgrade will prove essential given how reliant the overall business is on revenues from wireless subscriptions, this is the latest addition to an eye-wateringly big debt pile. Let’s not forget about AT&T’s staggering $85bn acquisition of Time Warner, which saw the telecoms giant enter the films business and acquire channels such as CNN. 

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All of this comes as AT&T faces increasing pressure to ensure that its infrastructure is modern across the US. It suffered a bit of embarrassment recently when a man who had been with the company for 60 years took out an advert in The Wall Street Journal to describe AT&T’s internet coverage in North Hollywood as a “major disappointment” – pointing to how rivals offer much faster speeds. In an increasingly digital age where we are all reliant on fast internet, it’ll become increasingly crucial for AT&T to nip such complaints in the bud.

AT&T stock: buy or sell?

Let’s wrap up with a look at the latest AT&T stock forecasts for 2021. Needless to say, with everything that’s currently going on, it’s an exceedingly mixed picture.

According to CNN Business, the median view indicates there will be a 5.2 per cent rise in the coming 12 months to $30. The high-end AT&T stock price prediction projects the share price will jump 33.2 per cent to $38, while the most pessimistic view anticipates a 43.9 per cent decline to $16.

Four analysts have a Buy rating on AT&T stock, while two say it will outperform. Sixteen analysts recommend holding the shares, while five have a Sell rating in place.

Looking ahead, all eyes will be on whether AT&T can continue to trim net debt that was nearing $150bn by the end of December.

With a share price of $28.51 at the time of writing, AT&T’s stock is barely trading above the 52-week lows of $26 seen last March. That’s at odds with other companies in the S&P 500, which have managed to recover lost ground over the past 12 months – with rival Verizon’s stock surging by more than 60 per cent in this time.

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Right now, AT&T is a company that’s pushing ahead with innovation while continuing to grapple with the decline in its legacy business. The continued success of its streaming offering – which is home to shows including Game Of Thrones, Westworld and Doctor Who – is going to be nothing short of essential. So too will be a rapid rollout of 5G coverage in the company’s biggest markets. AT&T will no doubt have been heartened that its network was named the fastest in the US over the fourth quarter, seeing off competition from T-Mobile, Sprint and Verizon.

FURTHER READING: Amazon stock price predictions: will shares fall when Bezos steps down?

FURTHER READING: GameStop stock prediction: is GME a good stock to buy?

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