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 1.02%) 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.
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.
