AT&T dips on analyst downgrade citing cord-cutting concerns
AT&T dips on analyst downgrade Jefferies downsize AT&T from Buy to Hold and drops the value focus from $40 to $35, a 5% upside to yesterday's close.
Investigator John Janedis refers to string slicing worries that keep on putting weight on edges.
Janedis accept the Time Warner arrangement will win endorsement, which would offer here and now benefits. In any case, the expert sees the hazard that programming ventures at HBO and Turner will move higher on rivalry and that "could top upside to the $1.5B of expected cost cooperative energies."
AT&T dips on analyst downgrade
Clearly, the potential antitrust action is unexpected. It’s also a little confusing — particularly the discussion of a potential settlement and what that might entail. This is a vertical merger after all: AT&T’s distribution and Time Warner’s content. It’s not a horizontal merger, where antitrust regulators might require the divestiture of part of the acquired company to ensure competition continues.
As the Journal points out, Comcast Corporation (NASDAQ:CMCSA) was able to acquire NBCUniversal — with restrictions requiring Comcast to distribute streaming services as well. It’s possible similar terms will be required for AT&T.
So far, investors in T stock aren’t sure what to make of the news. T stock actually spiked when the report first was released, rising over 2% in just five minutes. It then reversed, falling 3%, before moderating.
And there is an argument as to whether AT&T is better off with, or without, Time Warner. On one hand, T stock did decline on the news of the original buyout. Concerns about the company’s debt load, which would exceed $180 billion should the acquisition go through, and the effect of interest expense on the T dividend, have been part of the reason T stock has struggled so badly in 2017.
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