Sign InAT&T's Technicals Point Towards Potential Upside; Stock Price Expected to Hold at $15.01
Summary
AT&T's technical indicators show a minor increase in stock price, lower liquidity, and moderate overbought conditions, while its fundamentals suggest undervaluation and positive analyst consensus, with the potential for upward progress in the short term, leading to a recommendation to hold the stock with a possibility of shifting towards a buy in the future. (September 29, 2023)
Technicals
Analysing AT&T's technical indicators, the stock closed at $15.01 on September 28, 2023. This signifies a minor 0.94% increment in price ($0.14). It traded within a modest range, with a low of $14.87 and a high of $15.02 which were well within support and resistance levels at $14.59 and $15.06 respectively.
The stock's volume of 8.75 million is significantly below the average trading volume of 44.60 million, indicating lower liquidity and potentially weaker investor interest. Pressure on the stock may be lighter from both sellers and buyers.
The stock market performance over the year has been inconsistent, it reached a year-high of $21.53 and dipped to a year-low of $13.43. This reveals that the stock displays a considerable amount of volatility over the long term.
A critical technical metric, the RSI14, suggests the stock is moderately overbought at 63. The 50-day moving average stands at $14.56 while the 200-day moving average is $17.04, indicating that in recent weeks the stock has performed relatively well, but still trails in longer-term comparison.
The MACD (0.30) currently highlights bullish momentum over the past three months. The ATR when translated is 1.87, which implies volatility was fairly high in the past and may continue to be so.
Fundamentals
Focusing on the fundamentals, AT&T carries a market cap of $107 billion. The negative earnings per share of $-1.17 and resulting negative PE ratio of -12.79 are concerning, pointing towards the company's current inability to generate profits.
The discounted cash flow (DCF) value is projected at $15.45, which is slightly higher than the last closing price. This suggests that the stock might be undervalued, though caution must be applied using this particular valuation method due to its sensitivity to assumptions and projected cash flows.
Bear in mind that AT&T’s shares outstanding sits at 7.15 billion. Furthermore, AT&T's consensus opinion is outspokenly "Buy," with 11 favoring "Buy," 3 supporting "Hold," and just 1 recommending "Sell," this indicates optimistic views from market analysts.
The target median price of $26 and consensus target of $27.73 are also well above the last close price, pointing towards more bullish consensus among analysts. Even the target low of $16 holds higher than the current price, providing a positive outlook.
Company News
Incorporating the latest company news as of 29th September, AT&T has garnered investor attention, as noted by Zacks.com. It's also been observed that positive developments have occurred, enough to lift the stock from its 30-year lows despite facing major issues recently. The company's CFO is assertive about meeting the free cash flow guidance for 2023. Another report spotlights the company's optimistic view towards achieving a $16 billion free cash flow this year.
On the downside, some sources suggest that communications stocks, such as AT&T, continue to face a difficult run with a gain of only 39% over the past five years. There have also been warnings against over-optimism or 'drinking the kool-aid' regarding AT&T's stock performance.
Outlook And Recommendation
Considering the above, AT&T's short-term technical indicators show positivity, with the price above its 50-day moving average, and the MACD pointing towards bullish momentum. Despite the negative EPS and PE, the long-term target prices set by analysts and DCF indicate potential upside.
On September 29, 2023, AT&T's predicted stock price is expected to trade within the strong support and resistant levels between $14.59 and $15.06. Over the next week, given the recent momentum and considering the general consensus among analysts, it's possible that the stock may continue to show upward progress and possibly break the resistance level.
Therefore, based on all the substantiated observations and predictions, the final recommendation for AT&T Inc.'s stock, for now, is a Hold, with a potential shift towards Buy if the above-mentioned momentum continues and the upcoming earnings announcement turns out to be positive.
