AT&T, Revenue Growth Rate Around 1%... Stock Price Expected to Underperform

[Image source=AP Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Daishin Securities on the 29th downgraded the target price of AT&T to $31.01, considering that although HBO Max subscribers increased and the company weathered the COVID-19 crisis well, the revenue growth rate this year is expected to be around 1%. The investment opinion was maintained as ‘Hold (Neutral)’.

AT&T faced operational constraints last year due to COVID-19. The broadcasting content production, movie sales, and licensing sales of Warner Bros., which AT&T owns, decreased due to the impact of COVID-19. Advertising revenue from another affiliate, Turner, also declined as the NBA season was postponed to the end of the fourth quarter last year. The Latin America business saw revenue drop 15% year-on-year to $1.5 billion due to currency pressure and the impact of COVID-19.

Nevertheless, thanks to the strong performance of HBO Max, AT&T was able to record decent results. With an increase in HBO Max subscribers, revenue was $45.7 billion, down 2% year-on-year. This figure exceeded consensus estimates for both revenue and earnings per share.

Researcher Kim Hoe-jae of Daishin Securities evaluated, “WarnerMedia contributed to the increase in HBO subscribers by deciding to release the movie ‘Wonder Woman 1984’ simultaneously in theaters and on HBO in December last year,” adding, “HBO Max’s significance is growing as it achieved its two-year subscriber target for HBO and HBO Max ahead of schedule last year.”

The approximately 6 million increase in wireless communication subscribers in the U.S. was also a positive factor for the communications business segment. The device sales were driven by the popularity of Apple’s first 5G smartphone, the iPhone 12, launched in October last year. Postpaid subscribers increased by more than 800,000.

However, analyst Kim said, “Due to conservative guidance this year, AT&T’s stock price is expected to underperform,” adding, “The revenue growth rate is forecasted to be around 1%.”

This content was produced with the assistance of AI translation services.