Why is AT&T Inc. Soaring Today?

AT&T shares are leading the Dow higher today, based on one analyst note with the backing of AT&T's CFO.

Mar 20, 2014 at 2:00PM

Sometimes it doesn't take much to move a Dow Jones (DJINDICES:^DJI) stock with a $175 billion market cap. Today's second- biggest Dow gainer (as of 2 p.m. EDT) is AT&T (NYSE:T), rising 2.7% on nothing but an analyst note.

Representatives from well-respected analyst house Credit Suisse sat down with AT&T CFO John Stephens this week, and came away impressed. The firm tacked a buy rating and a $37 price target on AT&T shares. That target is about 12% ahead of AT&T's closing price last night.

The telecom's stock has been battered lately, due to strong competition from Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS). The two smaller carriers are making waves with new leadership and innovative strategies. T-Mobile is actually stealing customers from AT&T and fellow megacarrier Verizon (NYSE:VZ), while Sprint backer Masayoshi Son sends signals of an upcoming price war.


Image source: AT&T.

But Stephens told the Credit Suisse analyst team to stop worrying about these niggling challengers. "Recent competitive activity is similar to what they've seen in the past, indicating management feels the market remains rational," according to the firm's notes on AT&T. In Stephens' view, network quality matters more than pricing advantages, which means that AT&T and Verizon should be able to fend off smaller rivals and their less impressive radio spectrum portfolios -- without engaging in an all-out price war.

Personally, I'm not convinced that Stephens' logic is correct. It's true that network quality matters, and that AT&T and Verizon hold a spectrum-based advantage there. But pricing is important, too, and every AT&T customer has a pain threshold where a less impressive network could gain their business with a large enough discount.

If Sprint is allowed to acquire T-Mobile and create a third carrier with scale similar to AT&T and Verizon, we'll see where that pain threshold sits. If not, AT&T will be able to maintain high prices while bragging about its fast and reliable network. Rarely does one potential merger hold this much power over an entire industry.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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