AT&T (T) Faces Fresh Starlink Pressure, Is The Stock Still Cheap?

SpaceX’s Starlink plans to enter the direct to cellular market and target existing customers of major carriers, including AT&T (T). That shift has put AT&T’s competitive position and network strategy under closer scrutiny.

See our latest analysis for AT&T.

AT&T’s recent news flow, including new 5G devices, stadium network upgrades and fresh bond issuance, has coincided with a share price of US$24.50 and mixed momentum, with a 30 day share price return of 15.95% alongside a 1 year total shareholder return down 9.93% and a 3 year total shareholder return just over double.

If Starlink’s entry has you rethinking where growth in connectivity might come from, it can be useful to look across the sector and review 57 AI infrastructure stocks

AT&T appears to be a solid connectivity business, spanning 5G devices and high-density stadium networks, and the stock has bounced in the past month. At US$24.50, is that strength fairly reflected in the valuation today?

Most Popular Narrative: 15.6% Undervalued

AT&T’s most followed narrative puts fair value at $29.03, above the current $24.50 share price, and leans heavily on long term connectivity shifts.

Accelerated investments in 5G and fiber infrastructure, supported by recent pro-investment legislation and tax savings, are expanding AT&T's addressable market and improving its ability to capture growing mobile data, video streaming, IoT, and enterprise connectivity demand, directly fueling recurring revenue and future topline growth.

Read the complete narrative.

Want to see what underpins that valuation gap? The narrative leans on steady revenue expansion, slimmer margins, and a higher future earnings multiple than today. The full set of assumptions is worth a closer look.

The valuation work behind this narrative uses a discount rate of 7.76%, modest revenue growth expectations, and lower profit margins over time, which together still support a fair value above AT&T’s current share price. The result is a picture where today’s market value sits below the narrative view of future earnings power, while still baking in softer forecasts for earnings and a lower future P/E than the wider US telecom sector.

Result: Fair Value of $29.03 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, AT&T still faces pressure from rising competition in wireless and broadband, as well as the risk that heavier capital spending does not translate into stronger long term profitability.

Find out about the key risks to this AT&T narrative.

Next Steps

With investors weighing both concerns and optimism around AT&T, it helps to move fast, review the key data points, and decide where you stand. For a concise snapshot of what stands out on both sides, take a look at the 3 key rewards and 4 important warning signs.

Looking for more AT&T sized investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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