AT&T Stock Price Dips 5% in June – Time To Buy AT&T Stock?

AT&T Inc. made the news recently for what many investors call the wrong reasons. The American conglomerate is shedding its media assets in a bid to refocus on its core business– communication services.

AT&T will sell about 30% of its stake in DirecTV to TPG Capital. The telecom giant would also merge its WarnerMedia media asset with Discovery Inc. to create a media-focused, independent entity.

AT&T executives believe this would help them find their feet in the slippery financial market, but dividend payments would be affected.

Reports making the rounds put this cut at a 40% payout ratio. This would end a 36-year streak of yearly dividends increases.

The new stand-alone entity (no names yet) is expected to absolve over $58 billion in debt.

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Discovery CEO David Zaslav believes the move would provide a robust free cash flow to support debt settlement, reinvestment, and financial flexibility.

The flowery words are not convincing enough, and AT&T’s price has seen negative price action with the T stock in the red zone. At the close of trade on Friday, AT&T price dipped 0.31% to $28.65.

Even though it is unclear how AT&T plans to get itself out of the woods, this could be a great opportunity to buy the company stock at a bargain. In this short piece on AT&T price, we will consider the company’s fundamentals and way forward to see if it is a good buy or not.

AT&T Price – Technical And Fundamental Analysis

In its Q1 earnings report, AT&T noted that it had a consolidated revenue of $43.9 billion, up 2.7% from Q4 2020. Its diluted earnings per share (EPS) rose to $1.04 from $0.63, and free cash flow was put at $5.9 billion, up 51%.

However, AT&T price stands at $28.62, showing a bearish market trading below the 20-day moving average (MA) support of $29.33.

Its relative strength index (RSI) supports this fact with a 34.82 mark, while the moving average convergence and divergence (MACD) are hard to differentiate with both trendlines at 0.43.

Looking at its long-term prospect, AT&T price dips below the 200-day MA support at $29.30, showing the T stock is set for a long bearish ride.

AT&T – What Are Analysts Saying?

Many opinions are flying on the internet. Many commentators believe the telecoms company is slowly losing its grip in the 5G connectivity race. Others are pointing to a resurgence in the company’s profits.

For now, fellow American telecoms company T-Mobile is leading the 5G race. T-Mobile reportedly controls a whopping 33% of the American market. AT&T wants to ramp up its efforts in the 5G, as noted by CFO Pascal Desroches in a recent Credit Suisse communications conference.

Trying to assuage anxiety in the market, Desroches said that AT&T was accelerating its C-band spectrum. The telecom giant plans to reach 200 million people before by the end of 2023.

As promising as this statement is, AT&T may not be able to topple T-Mobile, which uses a 2.5 GHz spectrum and already covers more than 295 million customers.

T-Mobile’s 5G offering is also far superior to AT&T and Verizon’s C-band offering, given that it travels farther and penetrates buildings more easily than the competitor’s. This makes AT&T’s projected coverage still fall short in the short term.

Desroches also said that the telecom giant could reverse its previous losses by focusing on “higher-value customers.” This implies that AT&T could monetize its postpaid customers, making up a large chunk of its revenue source.

AT&T has seen its post-paid customer base take up a large share of its business with 77 million registered customers compared to 18 million prepaid customers in the same period.

Desroches also declared that the company would “double the size” of its “fiber footprint to about 30 million customer locations by year-end 2025,” further strengthening its broadband and wireline businesses which brought in about 22% in revenue for the previous year.

Capital investments have been put at $24 billion, with a large chunk scheduled to expand its 5G and fiber networks.

67% of all retail investor accounts lose money when trading CFDs with this provider.