AT&T (NYSE:T) was downgraded by UBS (NYSE:UBS), on slowing growth related to a loss of about 150,000 subscribers in the first two quarters. Earnings are expected to follow the subscribers down.
UBS says, "We are lowering our rating on AT&T to Neutral and
reducing our price target based on expectations for lower earnings and FCF growth in 2011 and 2012. Based on our new $2.38 EPS estimate (prior est. $2.55), the stock trades at 11.8x 2011 numbers, a 13% discount to the S&P 500 and roughly in line with its longer term average.
"Given slower growth in 4Q and expectations for increasing
competitive intensity, we now expect AT&T to lose 100K postpaid subscribers in 1Q11 and another 50K in 2Q vs previous expectations for a gain of 100K and 50K. We still expect the company to have positive postpaid sub growth for the year but believe the negative net adds will keep shares range bound until the return to growth."
UBS downgraded AT&T (T) from "Buy" to "Neutral. AT&T closed Friday at $27.49, dropping $0.64, or 2.28 percent. UBS lowered their price target on AT&T from $31 to $29.
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