Concerns about the media environment exposure of AT&T Inc. weigh on Monday's shares, putting them on track for their biggest four-day fall on record.
In the wake of the current pandemic selloff, AT&T Inc. is down 28 per cent from its peak earlier this year. Some of the market challenges include the ongoing closures of its retail stores with related costs, and the loss of subscriber development.
AT&T shares plummeted after a top industry analyst struck the telecom giant with an outperformance downgrade to market performance. Cowen & Company analyst Colby Synesael has also cut its price goal on AT&T from $43 to $37 a share, Bloomberg reported.
The brokerage claims that dynamic programs like WarnerMedia would generate a lot of confusion compared to competitor Verizon.
The telco saw a new bear gap alongside the wider sell-off market, for the first time since last June, falling below its 320-day moving average. The equity is down by 27.2 per cent year - to-date and reached an annual low of $26.27 earlier.
Though AT&T has no theme park properties, such as Walt Disney Co. and Comcast Corp, Synesael is worried about the advertising prospects for the Warner Media unit of the group, and writes that if ad dollars move from television to online during the COVID-19 crisis, they will never return to traditional media.
He is also worried that the crisis has the potential to postpone the introduction of AT&T's HBO Max subscription service or balance enthusiasm for the deal once it debuts.
The high debt status of the company remains a weakness of its investment profile and the current situation serves only to magnify the negative effect of the financial leverage.
Considering the company's major near-term difficulties in what is expected to be a material weak first quarter and second quarter, analysts think AT&T's connectivity and entertainment diversification reflects strength by overcoming some of the c.urrent pressures
Market strategists at Baird also downgraded AT&T on Monday, cutting their rating from outperform to neutral and their price target to $33 per share from $41.
Baid's reduction comes when it more widely shifts its place on the media landscape. It also lowered his rating on Comcast to outperform favorable, noting that broadcast, theme parks, and film "will take longer than anticipated to bounce back." And he turned bullish on Netflix's stock, suggesting that the economic uncertainty generated by the crisis might intensify trends in cord-cutting.
