AT&T is a blue chip stock that posted positive returns in 2022. But is it still a buy?
AT&T (NYSE:T) remains one of Wall Street’s outliers in 2022, as the stock trades well in the green even as rising inflation and speculation of a possible recession weighs on the broader market. Strong cash flow and a high dividend helped strengthen the stock.
Given the general economic uncertainty and increased competition, is the telecom giant still a buy at these levels?
Spin-off from Warner Media and Cash flow
Since the April spin-off from Warner Bros. Discovery (WBD), shares of AT&T flourished. The stock hit a 52-week low of $16.63 in mid-December, but stabilized in the first few months of 2022. The stock saw a rally in April and May, when the spin -off, and have kept those gains lately. T is currently trading just below $21.
T backed its stock with strong underlying activity, catching investors’ attention as an attractive defensive play and dividend-payer.
On the earnings front, the company demonstrated strong free cash flow in its latest earnings report. Meanwhile, T has sought to keep up with an inflationary environment with a decision to raise fees on specific plans by $6 for a single line and also $12 for a group family plan, a program launched earlier this month. June.
On the strength of its strong fundamentals, T has climbed almost 11% so far in 2022, with a P/E of 8x and a dividend yield of 5.4%.
Is T a buy?
Wall Street analysts have mixed views on T. Of the 30 analysts polled by Seeking Alpha over the past 90 days, six rate the stock as a strong buy and seven rate AT&T (T) as a buy. Meanwhile, the bulk of the group, 17 analysts in total, lists the company as a Hold. Two analysts place T as a strong sell.
Referring to a price target, the average analyst estimate stands at $22.71, up about 9% from current levels. The highest price estimate is placed at $28 per share and the lowest level is at $14 per share. See a breakdown below:
Seeking Alpha’s Quant Ratings also has a mixed view of the stock. On many quantitative measures, the system identifies a significant value. For example, T gets an A+ for profitability, as well as a B+ for valuation and a B for momentum.
However, Quant Ratings see a growth deficit, giving the telecommunications company an F in this area.
For more on the stock, Seeking Alpha contributor Cestrian Capital Research is bullish on T, saying, “If a recession were to hit, we believe [it] can continue to act as a store of value. At the same time, Librarian Capital sees structural problems in AT&T’s business, with mobility in particular facing commoditization and tougher competition.