Goldman favors the three major US telecoms, with AT&T (T.US) as the top pick

Market VisionWednesday, Sep 25, 2024 2:40 am ET

1min read

Zhitong Finance APP noticed that Goldman expects US wireless operators to maintain a stable performance in the rest of this year, benefiting from higher service revenue and strong incremental profits. The bank gave "buy" ratings to AT&T (T.US), Verizon (VZ.US) and T-Mobile (TMUS.US) and made AT&T its preferred stock.

Goldman expects AT&T's wireless business to achieve positive results and may announce capital allocation and repurchases. They noted that management's comments during the conference season were generally positive and felt that the company's view on wireless trends had not deteriorated.

The bank said: "Given the robust comments throughout the quarter and the lack of a significant change in management tone, we believe investors are optimistic about the stock. We believe the positive wireless backdrop supports a modest upgrade, but we expect a decline in consumer broadband expectations, given the impact of union strikes."

Regarding Verizon, the company hopes to see an improvement in its execution on adding phone networks. However, they expect the company to achieve a robust quarterly performance, given the improvement in wireless business execution and the continued momentum of fixed wireless access (which in turn drives user growth).

Goldman said, "We believe investors expect first-quarter results to be in line with expectations, and we expect Verizon to meet market expectations, though we believe the stock will be negatively impacted by the year-end if phone net additions fall short of expectations."

Regarding T-Mobile, Goldman said it has a "constructive" view of the stock. "We expect an increase in postpaid phone network additions in the third quarter and will rise to 2024 guidance. We believe short-term investors have become more bearish on the stock, while long-term investors are focusing on the company's 2025 guidance (driven by a decline in wholesale revenue) and are focusing on service revenue and EBITDA growth acceleration after 2025."

Goldman said: "We believe the company's annual 2% postpaid ARPA guidance supports our view that competition in the wireless industry is improving."

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.