AT&T Posts Another Solid Quarter as Revenue Growth Continues to Accelerate

AT&T’s third-quarter results lend support to our view that the firm is poised to deliver steadily improving performance in the coming years. While wireless customer additions slowed, revenue per customer spiked higher, exceeding our expectations. The firm expects to meet or exceed financial targets for the year, including generating $14 billion of free cash flow. While AT&T has clearly backed away from the 2023 free cash flow target of $20 billion set following the Warner spinoff, management expects this metric to grow next year, which we believe to be very reasonable and provides comfort around the dividend. We are maintaining our $25 fair value estimate, and we think the stock is significantly undervalued.