What happened
For a major stock in any sector, a recommendation upgrade from a top researcher can have an immediate and positive impact. Such was the case with AT&T (T +0.36%) on Tuesday, as an uptick from a big bank pushed the company's share price up to a nearly 2.3% gain on the day, more than three times the percentage increase of the S&P 500 index.
So what
The bank doing the upgrading was Wells Fargo, whose analyst Eric Luebchow raised his AT&T recommendation to overweight (buy) from the previous equal weight (neutral). In doing so, he also lifted his price target on the stock to $22; previously, it was $17. That implies 13% upside from the telecom's current level.
Luebchow is confident enough on his move to also name AT&T as his top wireless telecom pick for 2023.
In a research note detailing the upgrade, the analyst wrote that phone-service subscriber growth should continue to top historical levels. Other catalysts for the company include the build-out of its fiber network, which could lead to greater adaptation of its broadband internet service.
NYSE: T
Key Data Points
Now what
The Wells Fargo prognosticator tempered his bullish new take with caution about the current macroeconomic environment. He's particularly concerned with inflation; although this seems to be cooling, it remains a negative factor affecting consumer spending.
Luebchow's improved outlook tracks with that of AT&T management. At an industry conference last week, chief financial officer Pascal Desroches said that demand for wireless services is still robust despite headwinds.
