AT&T Share Price Forecast September 2021 – Time To Buy AT&T Stock?

Shares of the American multinational telecommunications company AT&T Inc. (NYSE: T) are in the red today, after closing at $27.56 on September 3rd (19:59 UTC-4). AT&T shareholders are having trouble keeping up with the company’s corporate developments, and the share price indicates their uncertainty. Analysts have been discussing how much the share will be worth after AT&T has decided to spin off its Warner Media division, merging it with Discovery to establish a new company.

AT&T – Technical Analysis

According to the financial statement from AT&T, the market capitalization of the company is at $196.778 billion with total assets worth $554.71 billion. Revenue for 2020 was $171.76 billion compared to $181.26 billion a year ago.

Moving averages for AT&T such as Exponential Moving Average (20)(27.61), Simple Moving Average (20)(27.66), Exponential Moving Average (30)(27.77), Simple Moving Average (30)(27.80), and Exponential Moving Average (50)(28.09) are pointing towards selling. Oscillators such as Relative Strength Index (14)(46.32), Stochastic %K (14, 3, 3)(41.60), Commodity Channel Index (20)(−20.77), and Average Directional Index (14)(21.81), on the other hand, are neutral.

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Recent Developments

AT&T just completed its venture into digital content, which started in 2015 with the $49 billion purchase of DIRECTV and was followed by the $85 billion acquisition of Time Warner in 2018. AT&T’s success with video was never well received by shareholders, and the share has dropped more than 30% in the last 5 years. AT&T’s Warner Media division is recently being spun off, joining with Discovery to launch a new business, which makes AT&T returning to its roots as a telecom company.

The $43 billion worth merger of the carrier’s WarnerMedia business with Discovery Communications is indeed a sensible move. Warner Bros. Discovery, the new venture, will undoubtedly have a broad selection of intellectual property and a streaming platform for broadcasting.  While several dividend investors bought the shares for the dividend, which will now be halved, they will also control 71 per cent of the new business.

Prior to actually acquiring DIRECTV, AT&T’s debt-to-EBITDA ratio was about two, indicating that the business had taken on a large amount of debt in the last 5 years. AT&T is unloading $43 billion in debt in completion of the Discovery merger, bringing the company’s debt/EBITDA ratio down to approximately 2.6 when the deal expires in mid-2022. Nevertheless, investors should keep in mind that the latest dividend yield is 7.6%, so the decreased pay-out will still be higher than several other dividend companies.

Should You Buy AT&T Shares?

One of the main causes for AT&T’s share price decline over the years has been the company’s massive debt load. The business borrowed extensively to fund the DIRECTV and Time Warner deals and has made no significant breakthrough in paying down its debt since the Time Warner merger 3 years ago. Since AT&T will no longer be a broad corporation of industries, but rather a firmly focused telecommunication once again, this should reflect in a better way in terms of capital allocation.

Late in July, AT&T announced strong second-quarter earnings, which brought in $44 billion in sales, up 7.6% over the previous year where the adjusted EPS came in at 89 cents, up 7.2 per cent. T share’s second-quarter earnings performance backs up the bullish position. While maintaining 71 per cent control of a valuable media asset, the business is making significant progress in building its 5G network. Considering the massive potential growth of its 5G wireless division, T share’s current fall may indicate a unique potential for long-term investors.

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