AT&T stock pops on Wells Fargo upgrade; a top telecom idea for 2023

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AT&T (NYSE:T) stock is up over 1% today after Wells Fargo analysts upgraded to Overweight from Equal Weight with a $22 per share price target (up from the prior $17).

AT&T stock is also named a Top Idea for 2023 across Wells Fargo’s research coverage of telecom stocks. The other two names in this category are Frontier Communications (NASDAQ:FYBR) and T-Mobile US (NASDAQ:TMUS).

“T is our top wireless pick of 2023, as (a) we see upside to lowered EBITDA and FCF consensus expectations, driven by strong wireless service revenue (+4%) and EBITDA growth (+6%); (b) an improving balance sheet should open up share repurchase optionality (as much as $15B) in 2024/2025; (c) relative valuation remains reasonable, particularly compared to VZ, which has a far more challenged earnings outlook in 2023 from rising rates and consumer phone declines,” the analysts explained in an upgrade note.

On the other hand, they downgraded United States Cellular (NYSE:USM) to Underweight from Overweight.

“We expect a combination of heavy promotional expenses and continued phone net losses to weigh on service revenue and EBITDA metrics in 2023. The continued success of cable, TMUS and potentially DISH creates even more competitive headwinds going forward for USM,” the analysts added.

United States Cellular stock is down about 3% today.