Key Highlights
- Shares of AT&T climbed 4.8% to reach $24.06 following second-quarter earnings that surpassed expectations with EPS of $0.65 compared to the $0.59 consensus forecast
- The telecom giant generated $4.7 billion in free cash flow, marking a 6.3% increase from the prior year and exceeding its own projected range
- Postpaid phone net additions reached 432,000, significantly outpacing analyst projections of 338,500
- Management lifted FY2026 earnings guidance to a range of $2.25ā$2.35 per share, while maintaining its quarterly dividend at $0.2775 (yielding 4.6%)
- Following the report, Wolfe Research upgraded the stock; Wall Street consensus reflects a Moderate Buy rating with an average target of $29.19
Shares of AT&T (T) surged 4.8% on Friday, closing at $24.06, as investors reacted positively to the company’s second-quarter financial performance that exceeded analyst forecasts. Trading volume spiked to over 80 million shares, representing approximately 57% above typical daily levels.
The telecommunications company delivered adjusted earnings per share of $0.65, comfortably beating the Street’s expectation of $0.59. While quarterly revenue of $31.56 billion fell modestly short of the $31.80 billion forecast, the miss did little to deter bullish sentiment.
The headline figure was free cash flow generation. AT&T produced $4.7 billion during the quarter ā up 6.3% compared to the same period last year ā exceeding even the company’s internal projection range of $4.0 billion to $4.5 billion.
Adjusted EBITDA rose 5.2% year-over-year to $12.3 billion, with the adjusted EBITDA margin expanding by 110 basis points to 39.1%.
In terms of subscriber metrics, AT&T brought in 432,000 postpaid phone net additions. The Street had anticipated just 338,500. Additionally, the company surpassed one million new advanced connectivity subscribers for the period, propelled by robust demand in fiber and fixed wireless services.
Looking ahead, AT&T increased its full-year 2026 EPS guidance to a range of $2.25ā$2.35. Current analyst consensus for the full year sits at $2.31.
Wall Street’s Take
In the wake of the earnings release, Wolfe Research moved to upgrade AT&T. Sanford C. Bernstein reaffirmed its “outperform” stance with a $25.00 price objective. TD Cowen bumped its target higher from $32.00 to $33.00, though it retained a “hold” recommendation. Argus reduced its target from $33.00 to $30.00 while keeping a “buy” rating intact.
Barclays lowered its price target from $26.00 to $24.00, maintaining an “equal weight” view. Overall, the consensus rating sits at Moderate Buy, with a mean price target of $29.19.
From a valuation perspective, the stock trades at approximately 6.7x forward EV/EBITDA ā below both Verizon’s 7.3x multiple and T-Mobile’s 8.8x, and under AT&T’s historical five-year range of 7.5x to 8x.
Shareholder Returns
AT&T announced a quarterly dividend of $0.2775 per share, scheduled for payment on August 3rd. On an annualized basis, that translates to $1.11, representing a 4.6% dividend yield. The current payout ratio stands at 37.25%.
The company maintains an active $10 billion share buyback program.
Short interest remains minimal at 1.81% of shares outstanding. Institutional ownership comprises 57.10% of the equity base.
Technical indicators show the 50-day moving average at $22.79, with the 200-day moving average at $24.24. AT&T’s market capitalization stands at $167.14 billion, with a trailing price-to-earnings ratio of 7.97 and a beta of 0.24.
Options market activity spiked following the earnings announcement, with call volume reaching unusually elevated levels as traders positioned for continued gains.
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