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JPMorgan lifts AT&T phone adds on lower churn

Published 06/13/2024, 01:09 PM
Updated 06/13/2024, 01:11 PM
© Reuters.  JPMorgan lifts AT&T (T) phone adds on lower churn
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JPMorgan raised its estimate for AT&T's (NYSE:T) second-quarter postpaid phone net adds to 275,000 from 250,000 in a note Thursday, citing lower churn.

"We are tweaking AT&T Mobility segment estimates ahead of 2Q results to reflect recent conference appearances by management and reiterated full-year guidance," explained analysts.

Despite continued normalization in the postpaid phone ecosystem, the bank lifted the estimate based on a lower churn of 0.72% as the switcher pool remains.

"At the same time, we expect AT&T's focus on profitable gross adds to persist with postpaid phone gross adds coming in 8% below the prior year period (vs -11% y/y in 1Q24)," the note adds.

Despite lower volumes (lower churn, lower upgrades) and slightly higher postpaid phone subs, JPMorgan maintained its above-Street Mobility segment EBITDA of $9.20 billion. However, it also lowered its 2Q24 upgrade rate to 2.8%.

The firm said AT&T is a top pick based on steady fiber and phone subs growth as well as improving margin and FCF profile. It reiterated its Overweight rating and $21 target for the stock.

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