AT&T (T) stock, boasting an enticing dividend yield nearing 8%, has failed to captivate investors amid a tumultuous 2023, witnessing a year-to-date decline of 20%.
In an interview at the Goldman Sachs Communacopia and Tech Conference in San Francisco, AT&T CEO John Stankey expressed his disappointment, acknowledging the stock’s struggle to attain what he perceives as its fair value. Stankey, however, maintained a pragmatic outlook, emphasizing ongoing efforts to reposition the business.
The telecommunications giant is undergoing a significant transition following the unwinding of its ill-fated Time Warner deal, previously valued at over $100 billion. In April 2022, AT&T and Discovery finalized a transaction resulting in the formation of Warner Brothers Discovery (WBD).
“We’re emerging from major transactions, and there’s an element of cautious optimism,” Stankey noted. “We must deliver on our promises consistently.”
In addition to a slowdown in growth for postpaid phone subscribers and its fiber business this year, AT&T faced controversy surrounding the widespread deployment of lead-covered cables, raising concerns over potential public health risks, as reported by the Wall Street Journal. The company vehemently disputed these claims, with Stankey affirming the company’s forward momentum.
“The business will perform and, ultimately, be valued justly,” Stankey assured during the interview. “I’m confident that this will come to pass. We simply need to approach each day with determination and run it to the best of our abilities, and in due course, the market will recognize the inherent value in the asset.”
According to Bloomberg data, Wall Street analysts currently offer 11 Buy recommendations, 19 Holds, and three Sells for AT&T stock. However, uncertainties persist for AT&T on Wall Street.
“We find it challenging to identify any fundamental investors showing interest in acquiring AT&T or Verizon at nearly any price, given fears of competition and now questions about lead,” wrote JPMorgan analyst Philip Cusick in July.
The high dividend yield of AT&T, approaching an enticing 8%, adds an additional layer of complexity to the company’s current predicament. While the yield may be attractive on the surface, it hasn’t been sufficient to sway investors amidst the stock’s challenging performance in 2023, which has seen a notable 20% decline year-to-date. As the telecommunications giant navigates this intricate terrain, it must not only address investor concerns but also find ways to leverage its dividend yield to rekindle confidence and stabilize its trajectory.
Source: Yahoo Finance