AT&T Jumps Higher Thursday After Better-Than-Expected Q3 Results

Key Points

• AT&T gapped up at the open Thursday after the company dialed in better-than-expected third-quarter revenue and earnings.
• The company also boosted its full-year earnings guidance.
• Analysts see a potential upside of nearly 36% in the stock.

AT&T NYSE: T gapped up 4.86% Thursday after the company dialed in better-than-expected third-quarter revenue and earnings. Those numbers were driven by a higher wireless postpaid subscriber count than analysts anticipated. 

Around 30 minutes into Thursday’s session, AT&T was trading 9.17% higher, at $16.95. 

The results may alleviate investor concerns that AT&T and its mobile-service-providing industry peers may suffer as consumers curtail spending amid high inflation and recessionary fears. AT&T shares already got walloped in July, following its second-quarter report, when it said a greater number of late payments from consumers were making a dent in cash flow. 

For the third quarter, adjusted earnings per share from continuing operations came in at $0.68, while revenue from continuing operations was $30 billion.

As you can see using data compiled by MarketBeat, that marked a year-over-year gain of 3% on the bottom line, and a top-line decrease of 4.1%. 

Even with the revenue decline, AT&T exceeded Wall Street’s expectations of $0.61 cents per share on revenue of $29.8 billion.

Highlights from the report include:

• 708,000 postpaid phone net additions in the quarter. This topped analyst estimates of 582,000. Postpaid subscribers are generally those with unlimited monthly data plans.
• This year, AT&T has added more than 2.2 million postpaid subscribers so far. The company said that’s “expected to be industry best.”
• 338,000 AT&T fiber Internet net additions, for its second-best quarter ever.
• Wireless service revenue grew 5.6%, AT&T’s best growth in more than a decade.
• CEO John Stankey said AT&T expects to achieve wireless service revenue growth in the upper end of a range between 4.5% and 5%.

AT&T noted that broadband network deployment was continuing on or ahead of schedule, while its mid-band 5G spectrum now covers 100 million people. The company updated its end-of-year 5G coverage target to more than 130 million people. 

It also said it was on track to achieve more than $4 billion of its $6 billion run-rate cost savings target by the end of 2022. 

While all that news certainly cheered investors, the company’s upwardly-adjusted earnings estimate is likely even more important. AT&T says it expects adjusted earnings per share from continuing operations to come in at $2.50 or higher for the full year. 

MarketBeat analyst data for AT&T show the consensus rating as “hold,” although as of Thursday’s pre-market, no analysts had yet updated their ratings to reflect new information.

AT&T has been in a long downward trend since early 2020, recently dropping to its lowest point since 2023. However, a more relevant short-term trend line indicates potential for the stock to regain a level between $21 and $22, where it was trading earlier this year. 

In fact, analysts’ price target of $22.72 reflects a potential upside of 38.55% in the next 12 to 18 months. 

By market capitalization, AT&T is the second-largest company in the telecom services industry, behind Verizon NYSE: VZ. Both, along with wireless giant T-Mobile U.S. NASDAQ: TMUS are components of the S&P 500 Communications Services sector, tracked by the Communication Services Select Sector ETF NYSEARCA: XLC.

The ETF was trading higher early Thursday, spurred by AT&T’s strength.

Verizon reports its third quarter Friday ahead of the opening bell. Analysts expect earnings of $1.28 per share on revenue of $33.90 billion. That would mark a decline on the bottom line, but a gain on the top line. 

MarketBeat earnings data show that Verizon has a mixed record when it comes to missing or beating views. 

T-Mobile reports its third quarter on October 27, with Wall Street eyeing earnings of $0.60 per share on revenue of $20.08 billion. Both would be year-over-year increases. 

T-Mobile has topped earnings views in the past eight quarters, but missed revenue expectations on occasion, according to data compiled by MarketBeat.