T: Future Returns Seen Balancing 5G Expansion Progress And Margin Pressures

Narrative Update on AT&T

Analysts have raised their price target for AT&T by about 2 dollars, reflecting higher expected revenue growth and a richer future valuation multiple, partially offset by a slightly lower projected profit margin and a higher discount rate.

What's in the News

• AT&T reaffirmed 2025 guidance, targeting low single digit consolidated service revenue growth, at least 3% mobility service revenue growth, and mid to high teens consumer fiber broadband revenue growth, and maintained similar low single digit service growth expectations for 2026 to 2027 (Corporate guidance).
• The company rapidly deployed mid band 3.45 GHz spectrum acquired from EchoStar to nearly 23,000 cell sites in a few weeks, boosting 5G download speeds by up to 80% for mobility customers and 55% for AT&T Internet Air users across more than 5,300 cities in 48 states, while improving capital efficiency by reducing the need for new cell sites (Client announcement).
• AT&T continued expanding subway connectivity in New York City with Boldyn Networks, launching 5G service in the Crosstown G line tunnels and the Joralemon Street tunnel, positioning itself as the first carrier on air in these key segments and reinforcing its public transit coverage strategy (Client announcement).
• Tech Mahindra signed a licensing agreement for AT&T's Automated Network Testing and Open Tool platforms, enabling global telecom providers to use AT&T developed automated network testing and traffic simulation tools in markets where AT&T does not operate, extending the reach of its network technology (Client announcement).
• AT&T and Thales launched a GSMA SGP.32 compliant eSIM solution for global IoT, allowing enterprises to ship devices with a single eSIM and remotely activate local connectivity profiles, improving logistics, automation, and cost optimization for large IoT fleets (Product related announcement).

Valuation Changes

• The Fair Value Estimate has risen moderately, from approximately 24.24 dollars to 26.14 dollars per share. This reflects higher expected long term cash flows and valuation multiples.
• The Discount Rate has increased significantly, from about 6.21% to 8.10%. This indicates a higher required return and perceived risk in the valuation model.
• Revenue Growth has improved meaningfully, with the long term annual growth assumption rising from roughly 0.73% to 1.33%.
• Net Profit Margin has declined modestly, from about 13.04% to 11.26%, signaling expectations for slightly lower profitability on future revenues.
• The future P/E has increased notably, from around 12.83x to 15.47x. This implies a richer valuation multiple on projected earnings.