UBS raised its rating of AT&T to buy from neutral on Thursday, citing a coming turnaround in the company’s operating performance and “an overly negative outlook” on AT&T shares, the firm said.
“We believe the stock is trading near all-time low valuations (and the widest gap to Verizon),” UBS analyst John Hodulik said in a note.
A 6 percent decline in earnings before interest, taxes, depreciation and amortization (EBITDA) during the first half of 2018 is going to turn around, according to UBS. The firm now sees “2 percent EBITDA growth in 2019.”
“Our work suggests the company will return to EBITDA growth … given growth in Wireless & WarnerMedia and slower declines in Entertainment,” UBS said. “We believe this inflection will provide upside to shares.”
UBS also bumped up its price target on the stock, to $38 a share from $33 a share.
Shares of AT&T rose 1.5 percent in premarket trading from Thursday’s close of $33.44 a share.
