Market Buries AT&T After T-Mobile Bid Fails; Now in Oversold Territory

AT&T Inc. (ticker: T, $27.75, down $0.30), together with its subsidiaries, provides telecommunication services to consumers, businesses, and other service providers worldwide. Its Wireless segment offers wireless voice communication services, including local wireless communications service, long-distance service, and roaming services.

The recent DOJ decision to hinder, if not scrap, the ATT/T-Mobile deal caused the share price of ATT to drop nearly 7% from nearly 30 to the present levels near 28. T is now trading within shouting distance of its recent low of 27.5, which was last seen with the S&P 500 below 1100.

While T Mobile would have been accretive to earnings, the reaction we feel is somewhat overdone. At these levels, T is now yielding around 6%, with a P/E multiple approaching 8. Both the yield and multiple are at historic extremes, especially given the low interest rate environment.

We look for T to retest its recent high of near 30, with a 30 price target by year end.

Tim Biggam
Tradingblock.com

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