Marketmind: Back to The Blues

Markets are in a somber mood on Thursday.

There is little let up on the Chinese property sector front with investors wondering how much damage the Chinese economy might suffer from a potential default of embattled property giant China Evergrande Group – now possibly just days away.

Evergrande shares suffered a double-digit tumble after it scrapped a deal to sell a stake in its property group, though it also secured an extension on a defaulted bond, according to media reports.

Adding to the woes is resurgence of COVID-19 and ensuing curbs. Russia is suffering record deaths and has reported some COVID-19 infections with a new coronavirus variant believed to be even more contagious than the Delta one.

Poland is facing an explosion of cases that may require drastic action, according to its health minister, while Latvia starts its lockdown today until mid-November to slow a spike in infections.

Futures point to more pain ahead for U.S. stocks later in the day.

But a batch of fresh earnings results might sooth some frayed nerves.

Unilever and Hermes sales beat estimates, Truck maker Volvo profit beats forecast, but companies do flag lingering chip woes.

Barclays Q3 beats expectations on strong investment bank performance, while Anglo American Q3 production inches higher.

Earnings highlights in the U.S. to come today are Intel, AT&T and Danaher.

In emerging markets, Turkey’s central bank will take centre stage. Policy makers are expected to deliver another interest rate cut despite stubbornly high inflation after President Tayyip Erdogan’s midnight reshuffle of the monetary policy committee.

Key developments that should provide more direction to markets on Thursday:

-EU starts two day summit

-NATO defense ministers meet

-U.S. initial jobless claims/Philly Fed index/existing home sales

-U.S. 5-year TIPS auction

-Fed speakers: San Francisco President Mary Daly

-Emerging markets: Turkey, Ukraine central banks

-U.S. earnings: AT&T, Blackstone, Dow, American airlines, Southwest airlines, Alaska Air, Intel Whirlpool Mattell

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Karin Strohecker)

Is It Time to Buy AT&T?

AT&T Inc. (T) reports Q3 2021 earnings on Thursday morning, with analysts looking for a profit of $0.80 per-share on $42.24 billion in revenue. If met, earnings-per-share (EPS) will mark a slight improvement compared to the same quarter in 2020. The stock booked a small gain after beating Q2 top and bottom line estimates in July but quickly turned tail, dropping more than 10% into last week’s 11-year low in the mid-20s.

Income-Minded Shareholders Hit the Exits

The telecomm giant rallied to a 52-week high in May after announcing a merger with Discovery Inc. (DISCA). The news triggered a flurry of upgrades but the mood soured after analysts realized the dividend would need to be slashed to complete the transaction. Income-minded shareholders headed for the exits, triggering a steep slide that relinquished more than 25% of the stock’s value into the October low. The merger is expected to close in the middle of 2022.

KeyBanc analyst Brandon Nispel just upgraded the stock to ‘Sector Weight’, citing reasons that make it tough to justify further downside. As he notes, “AT&T currently trades at <$20 post-Warner Media spin, or <6x our 2023 pro-forma adj. EBITDA, and it appears more difficult to justify further downside from current levels given: 1) simplification of the business; 2) reduced leverage; and 3) peers that trade at premiums. While we do not recommend owning AT&T and see modest downside to our $25 FV, further downside might support a more positive risk/reward.”

Wall Street and Technical Outlook

Wall Street consensus has grown highly bearish since May, dropping to a ‘Hold’ rating based upon 5 ‘Buy’, 2 ‘Overweight’, 18 ‘Hold’, and 1 ‘Underweight’ recommendation. In addition, three analysts are recommending that shareholders close positions. Price targets currently range from a low of $23 to a Street-high $37 while the stock is set to open Wednesday’s session less than $3 above the low target. This placement matches the KeyBanc view of limited downside.

AT&T tested the 2007 high in the 40s in 2016 and reversed, entering a decline that found support at 26.18 in 2018. It undercut that level by 78 cents during 2020’s pandemic decline and posted the second lower high since 2016 in May 2021. The selloff into October has undercut the 2018 and 2020 lows, dropping the stock to the lowest low since July 2010. A rally above 27 will set off a buy signal in this scenario but the 2008 bear market low near 21 may still come into play.

For a look at today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Apple Could Lose Ground in the Fourth Quarter

Dow component Apple Inc. (AAPL) posted an all-time high on Wednesday following an analyst upgrade, lifting its 2021 year-to-date return to 16.4%. Bullish summer sentiment throughout the big tech universe has underpinned this uptick, which is also feeding on positive reaction to the iPhone 12 Pro, released in the October 2020. However, there are technical dents in the icon’s shiny armor, raising odds that bears will take control in the fourth quarter.

Strong Upgrade Cycle

Analysts estimate that Apple has added 3% market share in China at the expense of Huawei, which now controls about 8% of sales. Here in the United States, telecom providers AT&T Inc. (T), Verizon Communications Inc. (VZ), and T-Mobile US Inc. (TMUS) have restarted aggressive promotions to existing customers, generating a positive impact on upgrade rates. Growing competition for 5G phones should force these companies to extend promotions well into the iPhone 13 product cycle.

Wolfe Research analyst Jeff Kvaal upgraded Apple to ‘Peer Perform’ on Wednesday, noting “we lift our FY22 iPhone unit/ASP assumptions from 228mn/$824 to 232mn/$833 given well-aligned US promotions and ongoing share gains. This translates into 4.6% sales growth and EPS of $5.85 (consensus 3.3%/$5.64). Recent PC results indicate demand remains well ahead of supply. We consider both products on a permanently higher trajectory as ~50% of shipments through the pandemic have been to new users”.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating after 2020’s historic 80% return, based upon 27 ‘Buy’, 5 ‘Overweight’, 9 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $90 to a Street-high $190 while the stock is set to open Thursday’s session about $15 below the median $168 target.  Closing the distance into the median target could be tougher than it looks, given technical red flags.

Apple broke out above the January 2020 high at a split-adjusted 81.96 and entered an historic advance that stalled in the upper 130s in September. The stock has added just 16 points in the last 12 months, posting an all-time high at 154.98 on Wednesday. The rally has nearly reached the trendline of rising highs over that period, exposing hidden resistance. More importantly, buying pressure has gone to sleep, slumping well below October 2020 and January 2021 peaks, suggesting it will take little energy to generate a major downdraft.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Today’s Market Wrap Up and a Glimpse Into Thursday

This rally may have legs after all. Stocks extended their gains from yesterday’s monstrous rebound, with all three major indices finishing the day in the green. The S&P 500 was up fractionally and inched closer to its all-time high. The Dow Jones Industrial Average gained almost 300 points while the tech-heavy Nasdaq was up nearly 1%.

Corporate America has taken the attention away from the one-two punch of the Delta variant and inflation, as the earnings parade continues to roll on.

Oil is trading above the USD 70 threshold once again after gaining close to 5% on the day. The VanEck Vectors Oil Services ETF climbed higher by 4.5% and is up in extended-hours trading as well. This ETF has also rebounded 10% since its low point on Monday.

Elon Musk and Jack Dorsey were in the spotlight as they participated in “The B Word” event about bitcoin. Musk tipped his hand to his space travel company, SpaceX, owning bitcoin, as does he and Tesla. The attention did little for the Tesla stock price today but bitcoin is having a nice run.

Stock futures are little changed in extended-hours trading.

Stocks to Watch

AT&T will report its Q2 results before the opening bell. The company on Wednesday announced plans to offload Vrio, its Latin American DirecTV arm amid a USD 4.6 billion impairment charge. The telecom giant sold the business to Grupo Werthein.

US Steel advanced 4.5% on Wednesday and is higher in after-hours trading. Since the bottom fell out of the stock market on Monday, US Steel shares are up 12% from their lowest point. Steel prices have been hovering at record highs amid supply constraints, conditions that are expected to persist.

Look Ahead

Existing Home Sales for June come out at 10 a.m. ET. This indicator has been on the decline for four straight months but still hovers at a solid annual rate of 5.8 million units. Wells Fargo economists predict sales moved higher last month to a rate of 6.06 million units thanks to “demand for extra space” coupled with low rates.

The Leading Economic Index (LEI) for June also comes out on Thursday. In light of a “mixed bag of economic data” in recent weeks, Wells Fargo economists forecast that this indicator increased 0.8% last month.


Why Shares Of AT&T Are Up By 5% Today?

AT&T Video 22.04.21.

AT&T Stock Gains Ground After Strong Quarterly Report

Shares of AT&T gained upside momentum after the company released its first-quarter results. AT&T reported revenue of $43.9 billion and GAAP earnings of $1.04 per share, beating analyst estimates on both earnings and revenue. The company’s free cash flow totaled $5.9 billion.

AT&T showed strong results in communications and media segments. HBO Max added 2.7 million domestic subscribers, which was a positive surprise after the recent disappointing results from Netflix. Currently, HBO Max has 44.2 million domestic subscribers and nearly 64 million globally.

The company has also issued guidance for 2021. AT&T expects that its consolidated revenue will grow in the 1% range on a comparative basis. Adjusted EPS should be close to 2020 level. Free cash flow is expected to be in the $26 billion range, while the full-year total dividend payout ratio is projected to be in the high 50’s% range.

What’s Next For AT&T?

AT&T has certainly managed to surprise investors with a strong quarterly report. AT&T shares are traditionally viewed as a solid dividend play but investors often have questions about the company’s growth perspectives.

The recent results suggest that AT&T continues to find ways to grow its revenue and deliver strong free cash flow performance. At current prices, AT&T yields about 6.6%, which is sufficient enough to attract yield-oriented investors.

The dividend payout ratio remains at comfortable levels while the company’s business performs well which should attract more interest to the company’s stock.

It should be noted that AT&T shares remain far from pre-pandemic levels, and they have been mostly range-bound between $26 and $32 since March 2020. The strong quarterly report may serve as the catalyst that will ultimately push the stock out of this range. In this case, AT&T stock may also attract momentum traders who will help it get to higher levels.

For a look at all of today’s economic events, check out our economic calendar.

AT&T Beats Revenue Estimates as Reopening Helps Phone Sales

By Sheila Dang and Akanksha Rana

The company said on Thursday it added 595,000 net wireless phone subscribers in the first quarter, more than double what analysts had expected.

Shares of AT&T surged 4.25% to $31.40 in premarket trading.

AT&T’s controversial move to make its entire 2021 theatrical movies slate available to its streaming customers at the same time helped the company attract 2.7 milllion new subscribers for HBO and HBO Max.

The services now have a total of 44.2 million U.S. subscribers, AT&T said.

Its movie release of “Godzilla vs. Kong” has generated over $80 million at the U.S. box office and over $300 million globally as the No. 1 film over the past three weekends.

Shares of streaming rival Netflix sank 11% on Monday after it reported a sharp slowdown in new customer additions globally. In the U.S. and Canada, Netflix added 450,000 new paid subscribers.

AT&T has been investing heavily in its new 5G wireless network and bundling its streaming service HBO Max for free with certain phone plans to retain customers and keep them from switching to competitors.

Wireless phone churn, or the rate of customer defections, declined 0.1% in the first quarter to 0.76%. The improvements were, in part, due to the bundling of HBO Max to higher-priced phone plans.

Revenue for AT&T was up nearly 3% at $43.9 billion, beating analysts’ average estimate of $42.69 billion, according to IBES data from Refinitiv.

Excluding items, AT&T earned 86 cents per share, above analyst estimates of 78 cents.

WarnerMedia, which includes HBO, began to recover from the ravages of the pandemic during which sports events and movie productions were paused. Revenue for WarnerMedia rose 9.8% to $8.5 billion.

AT&T added 235,000 new fiber internet customers, as Americans continued to work from home during the pandemic, driving up demand for home Wi-Fi.

The company’s net debt rose to $169 billion at the end of the first quarter, due to its purchase of more wireless spectrum, or airwaves that carry data.

Separately, rival Verizon Communications Inc has said it lost more wireless subscribers than expected during the first quarter as it battled intense competition from T-Mobile US Inc and AT&T to attract customers.

(Reporting by Akanksha Rana in Bengaluru and Sheila Dang in Dallas; Editing by Kenneth Li, Shinjini Ganguli and Bernadette Baum)

AT&T Raises Global HBO Max and HBO Subscribers Forecast, Shares Gain Over 4%

AT&T raised its forecasts for global HBO Max and HBO subscribers to 120-150 million from the previous projection of 75-90 million, sending its shares up over 4% on Friday.

The company forecasts to launch HBO Max in 60 markets outside the United States in 2021 and expects to launch in the U.S. market an advertising-supported (AVOD) version of HBO Max in June.

This year, the wireless company is planning to increase its fiber footprint by an extra 3 million customer locations across more than 90 metro areas.

Following this, AT&T shares, which slumped around 26% in 2020, rose over 4% to $30.84 on Friday.

Analyst Comments

“While revenues are expected to double over 5 years, profitability will be a focus with dilution peaking in 2022 and breakeven targeted by 2025. AT&T also committed to deploying their new C-Band spectrum starting later this year with 2021 gross capex (and overall guidance) reiterated at $21bn, and called out $6-8bn in capex over 2022-24, at this point it’s not clear whether this is incremental to the current run rate (as at Verizon). AT&T also committed to building past another 3m fiber locations this year,” said Simon Flannery, equity analyst at Morgan Stanley.

“AT&T’s new leverage target is 2.5x or lower by 2024, down from an estimated 3.0x at the end of 2021. We will be looking for more color around free cash flow generation and dividend payout over the next several years, particularly with the impact of the DTV transaction which is set to close in 2H21. This deal should improve top-line trends by 100bp and margins by 300bp although the unit generated some $4bn in free cash flow annually. The company did not provide longer-term revenue or EBITDA growth targets in the release, but we may get more color during the event.”

AT&T Stock Price Forecast

Eleven analysts who offered stock ratings for AT&T in the last three months forecast the average price in 12 months of $31.88 with a high forecast of $38.00 and a low forecast of $24.00.

The average price target represents a 4.70% increase from the last price of $30.45. Of those eleven analysts, four rated “Buy”, six rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $34 with a high of $46 under a bull scenario and $26 under the worst-case scenario. The firm gave an “Equal-weight” rating on the wireless company’s stock.

“Valuations near multi-year lows already reflect company and industry concerns. Return to wireless service revenue growth with Firstnet and nationwide 5G rollout in 1H20. Potential industry consolidation provides upside opportunities. A dividend payout ratio in the 60s is sustainable in the medium term, buybacks possible as deleveraging continues,” said Morgan Stanley’s Flannery.

Several other analysts have also updated their stock outlook. Scotiabank raised the target price to $28 from $27.5. Deutsche Bank lowered the price target to $31 from $36. Independent Research increased the target price to $29.00 from $27.00 and gave a hold rating. Citigroup cut the price target to $34 from $36. JP Morgan lowered the target price to $32 from $34.

Check out FX Empire’s earnings calendar

Roku Streams Higher After HBO Agreement

Roku, Inc. (ROKU) shares gained 4.37% in extended-hours trade Wednesday after the $41.36 billion digital media company announced it had reached an agreement with WarnerMedia to stream HBO Max content across its devices.

While Roku and WarnerMedia – a subsidiary of communications giant AT&T Inc. (T) – did not disclose specific details of the arrangement, both sides said that they were pleased to hash out a deal that had been on the table since May. The company hopes that the distribution of premium content on its platform will bolster its 46 million-strong active subscriber base and capture market share from Netflix, Walt Disney’s Disney+, and Comcast’s Peacock.

“We believe that all entertainment will be streamed, and we are thrilled to partner with HBO Max to bring their incredible library of iconic entertainment brands and blockbuster slate of direct to streaming theatrical releases to the Roku households with more than 100 million people that have made Roku the No. 1 TV streaming platform in America,” the company’s platform business manager Scott Rosenberg said, per Business Wire.

As of Dec. 17, 2020, Roku stock has surged 143.33% year to date (YTD), gaining around 40% in the past month alone. Like many streaming stocks, the company continues to benefit from people spending more time at home during the pandemic watching the latest blockbuster movies and hit television shows.

Wall Street View

Earlier this month, Citi’s Jason Bazinet bumped the investment bank’s price target on the stock to $375 from $220 while maintaining his ‘Buy’ recommendation. The analyst sees distribution agreements, such as the HBO Max deal, and expansion into international markets as a catalyst for further growth. Moreover, Bazinet places an enterprise value per active Roku account at $619, based on platform margins. Most other brokerages on the Street also have a bullish outlook on the stock. It receives 16 ‘Buy’ ratings, 9 ‘Hold’ rating, 1 ‘Underweight’ rating, and 1 ‘Sell’ rating.

Although several sell-side analysts had factored in an HBO Max carriage agreement, the stock may attract additional upgrades in the coming weeks due to the deal’s timing ahead of highly anticipated content like “Wonder Woman 1984,” which debuts on HBO Max and theaters Christmas Day.

Technical Outlook and Trading Tactics

After bouncing from support at $196 in early November, Roku shares have trended sharply higher. Although the stock is susceptible to a short-term correction, active traders should focus on playing upside momentum, remembering the old Wall Street adage – “the trend is your friend.” To deploy this strategy, consider using a fast period moving average, such as the 15-day SMA, as a trailing stop to let profits run. Simply exit the trade when the price closes below the indicator.

For a look at today’s earnings schedule, check out our earnings calendar.

3 Stocks for Investors Chasing High Paying Dividends

Interest rates were already near historic lows before the COVID-19 pandemic and look like remaining that way for the foreseeable future as the Federal Reserve encourages more borrowing to stimulate the economy. As an alternative to keeping cash squirreled away in a low-interest saving account or government bond, investors can chase a higher return on their money by purchasing high paying dividend stocks.

Bear in mind, companies can slash or reduce their dividend at any time. For example, the major airline stocks pulled their dividends earlier this year amid the uncertainty surrounding travel during the health crisis. In saying that, let’s take a closer look at the three stocks in the S&P 500 that each offer a dividend of over 7%. Currently, the average stock in the index yields 1.8%.

Exxon Mobil Corporation

With headquarters in Irving, Texas, Exxon Mobil Corporation (XOM) explores for and produces crude oil and natural gas. The global energy giant has increased its annual dividend for 33 consecutive years at an average of 3.53% each year. Investors currently receive a healthy forward dividend yield of 8.29%.

As of Nov. 26, 2020, the stock has a market capitalization of $172.55 billion and trades around 25% higher over the past month. From a chart perspective, a recent breakout above a 10-month downtrend line may trigger a retest of the early June swing high at $55.36.

Altria Group, Inc.

Altria Group, Inc. (MO) manufactures and sells cigarettes, smokeless products, and wine in the United States. Although not everyone’s cup of tea, the cigarette maker issues a smoking hot annual dividend of $3.44 per share, equaling an 8.52% yield. Furthermore, the company’s dividend has increased by an average of 11.75% annually for the past 11 straight years.

Altria shares have a market value of $75 billion and trade up a modest 3.33% over the last month as of Nov. 26, 2020. Technically, the price continues to find resistance from the top trendline of a descending channel that may see a decline to the pattern’s opposing side at $35.75.

AT&T Inc.

AT&T Inc. (T) provides telecommunication, media, and technology services through four segments: Communications, WarnerMedia, Latin America, and Xandr. The $206.58 billion communications titan pays a $2.08 dividend per share, with a yield of 7.17%. Impressively, the 37-year-old Dallas-based company has raised its dividend by an average of 2.04% each year for the past 36 consecutive years.

As of Nov. 26, 2020, AT&T stock has gained 4.21% over the last month, outperforming the telecommunications sector average by about 1%. Chart wise, the shares have consolidated since breaking above a multi-month downtrend line earlier this month. A breakout from this level could spark a rally to the June swing high at $33.24.

For a look at today’s earnings schedule, check out our earnings calendar.

AT&T Likely to Sell its Digital Advertising Unit Xandr; Target Price $25 in Worst-Case

AT&T Inc, an American multinational conglomerate holding company, is in discussions to sell its digital advertising unit Xandr, the Wall Street Journal reported citing people familiar with the matter, sending its shares down over 1% on Tuesday.

“Discussions are at an early stage and may not ultimately result in a sale, which is unlikely to fetch more than the amount AT&T paid for AppNexus in 2018,” the WSJ reported.

AT&T’s consolidated revenues for the second quarter totalled $41.0 billion versus $45.0 billion in the year-ago quarter. The COVID-19 pandemic impacted revenues across all segments.

Xandr revenue climbed more than 15% last year to $2 billion.

“AT&T’s wireless growth opportunities remain impressive with the widespread launch of mobile 5G services in several cities. The inherent growth potential of the streaming services from HBO Max also bodes well,” noted analysts at Zacks Research.

“(But) AT&T continues to struggle in a competitive and saturated U.S. wireless industry, while margin pressures due to promotional offers and discounts are headwinds amid the coronavirus-induced turmoil.”

AT&T shares closed 1.14% lower at $29.47 on Friday, the stock is down about 25% so far this year.

AT&T stock forecast

Twelve analysts forecast the average price in 12 months at $34.00 with a high forecast of $38.00 and a low forecast of $25.00. The average price target represents a 15.37% increase from the last price of $29.47. From those 12 analysts, eight rated “Buy”, two rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley gave a target price of $36 with a high of $49 under a bull-case scenario and $26 under the worst-case scenario. Scotiabank lowered their rating to sector underperform from sector perform; cuts target price to $30 from $34.

Other equity analysts also recently updated their stock outlook. AT&T had its price target boosted by Royal Bank of Canada to $25 from $24. They currently have an outperform rating on the technology company’s stock. Zacks Investment Research downgraded shares of AT&T from a hold rating to a sell rating and set a $33.00 price objective. Guggenheim lowered their price objective to $38 from $39 and set a buy rating.

Analyst view

“Valuations near multi-year lows already reflect company and industry concerns. Return to wireless service revenue growth with Firstnet and nationwide 5G rollout in 1H20. Potential industry consolidation provides upside opportunities. A dividend payout ratio in the 60s is sustainable in the medium term, buybacks possible as deleveraging continues,” said Simon Flannery, equity analyst at Morgan Stanley.

“Our valuation reflects 5.75% 2020E dividend yield, which is a +400bps spread above the MS Strategy 4Q20 US 10-year Treasury forecast, slightly wider than the historical 5-year average,” he added.

Upside and Downside risks

Upside: 1) Four to three wireless consolidation. 2) Return to wireless service revenue growth. 3) Improving Entertainment Group trends. 4) Activist Shareholder drives change – highlighted Morgan Stanley.

Downside: 1) Increased wireless competition ends return to service revenue growth. 2) Free cash flow pressured, increasing leverage and dividend sustainability concerns. 3) Recession could pressure business wireline, advertising revenues. 4) OTT dilution and execution risks.

T-Mobile US Q2 Revenue Jumps 61%, Overtakes AT&T as Second-Largest Carrier; Target Price $115

T-Mobile US Inc, an American wireless network operator, said its revenue jumped 61% to $17.67 billion in the second quarter, beating Wall Street estimates and added it has overtaken rival AT&T Inc as the second-largest wireless provider in the world’s biggest economy, sending its shares over 5% pre-market trading on Friday.

The telecommunications company headquartered in Washington said it add 1,245,000 new customers in the second quarter of this year, pushing its total customer count to 98.3 million, overtaking AT&T in total branded customers across both postpaid and prepaid.

T-Mobile’s Total revenues increased 61% to $17.7 billion in Q2 2020, driven by the Sprint merger and continued customer growth at T-Mobile. That was higher than strategists’ estimates of $17.61 billion, according to IBES data. The company said its net income declined to $110 million, or 9 cents per share, from $939 million, or $1.09 per share, a year earlier.

“We don’t expect to materially change our $89 fair value estimate and we view the shares as modestly overvalued,” said Michael Hodel, director at Morningstar.

On Thursday, T-Mobile US’ shares closed 0.19% higher at $108.10 but gained over 5% in pre-hours trading on the last trading day of the week.

Executive comment

“Surpassing AT&T to become #2 was a huge milestone to kick off Q2, but that was only the beginning! In our first quarter as a combined company, T-Mobile led the industry in total branded customer adds – even in a challenging environment – and there is no doubt that we are THE leading growth company in wireless,” Mike Sievert, T-Mobile CEO said in a press release.

“Now we’re setting our sights on #1 – in customer choice and customers’ hearts – and we’ll get there by doing ONLY what the Un-carrier can do: offering customers the most advanced 5G network AND the best value while continuing to make big moves that fix customer pain points and disrupt this industry. I’m excited about what’s to come in this new T-Mobile era – we’re just getting started!”

T-Mobile US stock forecast

Sixteen analysts forecast the average price in 12 months at $119.50 with a high forecast of $140.00 and a low forecast of $94.82. The average price target represents a 10.55% increase from the last price of $108.10. From those 16, 13 analysts rated ‘Buy’, three analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $115 with a high of $146 under a bull scenario and $62 under the worst-case scenario. JPMorgan raised the target price to $140 from $110 and Deutsche bank kept target price unchanged at $140 target price, upped the rating to buy from hold.

Several other equity analysts have also updated their stock outlook. T-Mobile U.S. received a $110 price target from analysts at Royal Bank of Canada. The firm presently has a “neutral” rating. KeyCorp boosted their target price to $126 from $104 and gave the company an “overweight” rating. Nomura Instinet boosted their target price on T-Mobile U.S. to $110 from $102 and gave the company a “buy” rating.

We think it is good to buy at the current level and target at least $115 as 100-day Moving Average and 100-200-day MACD Oscillator signal a strong buying opportunity.

Analyst comment

“With the closing of the Sprint merger on April 1, T-Mobile has established itself on relatively equal footing with AT&T and Verizon. Postpaid market share now stands at nearly 30% with the company targeting 2-4% service revenue growth,” Morgan Stanley’s McLeod added.

“The company will be focused on the large integration ahead as it targets $6bn+ in run-rate synergies with the majority coming from decommissioning the legacy Sprint network and moving those subscribers over to a new 5G network. Fixed wireless broadband-enabled by the company’s enhanced mid-band spectrum portfolio could open up an $80 billion + adjacent TAM,” the analyst added.

Upside and Downside risks

1) Better net add and ARPU growth driven by new 5G network 2) Quicker synergy realization 3) Significant growth in fixed wireless broadband, Morgan Stanley highlighted as upside risks to T-Mobile.

1) High churn of Sprint subscriber base. 2) Difficulty in achieving synergy targets and integrating Sprint subscribers. 3) Wireless competition intensifies pressuring ARPUs, were major downside risks.

Markets’ Weather Weekly: Сloud-Computing and Office Software Business Missed Quarterly Estimates.

Overview and trends

U.S. weekly jobless claims hit 1.4 million, the first increase since March, as spiking virus cases halt reopening plans.

Microsoft shares tumbled as much as 2.8% on Thursday after its cloud-computing and office software business missed quarterly estimates. The share price slump caused nearly $46 billion dollars erased from the company’s market capitalization. Intel Corporation (INTC) shares were trading lower yesterday despite the company reported better-than-expected second-quarter EPS and earnings results.

As a result, the tech-heavy Nasdaq Composite finished down 2.3%. The S&P 500 closed down 1.2%. It was their worst performance since June 26. The Dow (INDU) fell 1.3%, or 354 points, its worst day in two weeks.

Stocks weren’t the only assets in the red. The US dollar, as measured by the ICE US Dollar Index, fell 0.2%. The index hit its lowest level since September 2018.

So far quarterly earnings come very mixed. On positive side there are good reports and good responses to the earnings reports from IBM (IBM), Texas Instruments (TXN), Biogen (BIIB), KeyCorp (KEY), as well as yesterday’s miracle from Tesla (TSLA) and upbeat sales commentary from Best Buy (BBY).

Then again, a close candidate for why things are “bad” would be the negative responses to earnings reports from Bank of America (BAC), Netflix (NFLX), Snap (SNAP), Capital One (COF), United Airlines (UAL), and Interactive Brokers (IBKR). Microsoft (MSFT) stock sank over 2% after reporting earnings that beat Wall Street expectations in most ways except in a key business. All these stories prompt us to be extremely vigilant, resourceful and contemplative – correct instrument selection and trade direction is key to trading success through this period!

The week was full of important news. US stocks climbed on Wednesday on positive earnings numbers from Microsoft and Tesla and as traders weighed raging tensions between the U.S. and China, a potential legislative extension to unemployment benefits, and coronavirus vaccine news. Donald Trump’s administration ordered the abrupt closure of China’s consulate in Houston, and official Beijing promptly responded with its intention to close the U.S. consulate in Wuhan in a tit-for-tat game condemned by Beijing as outrageous and unprecedented.

The U.S. government has struck an agreement with Pfizer (PFE) and BioNTech (BNTX) for up to 600 million doses of their COVID vaccine candidate should it be approved. This optimistic expectation and early preparation effort have created positive sentiment in terms of thinking about light at the end of the tunnel down the road.

Trading ideas

The Gold/Silver complex has caught renewed bids this week, which was tipped off by the major gold ETF – SPDR Gold Trust – showing up on the “Doji Week” scan back on Monday. The Doji Week scan is designed to find stocks that are in narrow ranges compared to prior week’s activity that is geared up for a stronger directional move.

There are a number of Gold/Silver – related ETFs and stocks appearing on the Wide Range Breakouts, Power Up, and Overbought results today as the market gets behind their momentum against a sliding US Dollar. As investors’ classics – Barrick Gold (GLD) and Newmont Corp. (NEM) – look increasingly overvalued by both investment multiples and technically, new kids on the block, such as Agnico Eagle Mines (AEM) and Kinross Gold (KGC) look increasingly promising. The two latter stocks unveil single digit price-to-sales ratios as opposed to double-digit ones for Barrick and Newmont.

AT&T (T)

The largest American telecom AT&T (T) beat estimates by 4 cents a share, with quarterly earnings of 83 cents per share. Revenue was in line with forecasts. The company said the COVID-19 pandemic impacted results across all its businesses. Thus, WarnerMedia revenue fell 23% to $6.8 billion as the pandemic shut down film production and movie theaters. Group revenue was down 9% YoY to $41 billion, roughly in line with the $41.1 billion consensus. In contrast, AT&T’s HBO Max boasted by around 36 million active customers (including legacy HBO subscribers), picking up 3 million in the quarter. Cash from operations was $12.1 billion with free cash flow of healthy $7.6 billion.

Total dividend payout ratio remains slightly below 50%. Nevertheless, we must not forget about this telecom’s two extremely important properties: number one, it is the value high dividend stocks. And number two, it is classic defensive countercyclical stock. Given increasing odds of exacerbating recession and noting almost ridiculously cheap valuations at P/E of less than 15, dividend yield of 7% and price-to-cash-flow of just 8 (yes, this is a single-digit number, eight), at the current price level AT&T is perhaps one of very few smart medium term buys.

Vladimir Rojankovski, Grand Capital Chief Analyst

Global Equities Struggle For Direction, EUR/USD Slumps To New Low, Boeing Raises Guidance

Asian Markets Mixed Amid Fears Of Slowing Growth

Asian indices closed the Wednesday session mixed following Tuesday’s deep declines. Fear of slowing growth has gripped the market despite word from the PBOC it would work to support economic activity in China. The Korean Kospi led decliners with a loss of 0.40% and was closely followed by the Hong Kong Heng Seng Index. Japan’s Nikkei led advancing indices with a gain of 0.37% followed closely by China’s mainland Shang Hai index. Energy stocks were among the regions biggest losers as oil prices move to a new two-month low.

Oil prices fell hard in Tuesday’s US session leaving the price of WTI sitting on a key support level near $66.00. The move began last week when US crude oil inventories increased 4X the expected amount offsetting fears sanctions against Iran would tighten the market. Yesterday’s mass sell-off was sparked by word from Saudi Arabia it would work to ensure global oil markets remain well supplied. The move trimmed 5.0% from the price of WTI and has the price near the bottom of a short-term trading range where it may find support.

The EUR/USD Falls As Economic Activity Falls Short Of Expectation

European indices moved higher in the first half of the EU session with the CAC leading the charge advancing more than 1.15%. The DAX and FTSE were not far behind, each, posting gains in the range of 1.0%, and all three indices supported by earnings. In France, shares of Kering and Societe BIC advanced more than 8.0% on better than expected earnings. Kering, the owner of iconic brands like Gucci, says sales are strong and gave a favorable outlook.

The EUR/USD fell hard during the EU session on weaker than expected economic data. The EU Purchasing Managers Index shows expansion within the EU is still happening but at a slower rate than in the previous month and much slower than expected. The reported 52.7 for the composite figure, both manufacturing and services, fell 1.4 points from previous and missed expectations by 1.2 points. The data raises concerns that EU growth is slowing faster than expected which is an indication the ECB may need to prolong its QE program past the indicated December end-date. The ECB will release its policy statement on Thursday and will likely produce a market moving event.

US Futures Make Triple Digit Swing

In the US equity futures went on a wild ride in the early pre-opening session. The Dow was indicated to open with a triple-digit loss until the release of earnings by Boeing. Boeing reported better than expected top and bottom line issued, a favorable outlook for its business, and raised full year guidance which resulted in a 5% gain for the shares of the stock. Other notable earnings in the pre-market session include AT&T and UPS. AT&T missed on the top and bottom lines sending shares down by 3.0%, UPS reported figures that were only as expected and sent shares of that stock down more than 2.5%.

Today’s action is going to be dominated by two things; earnings and the FOMC. A host of important earnings are due out after the bell including Barrick Gold (BKX), Ford (F), Microsoft (MSFT), and Visa. Before that look out for the Fed’s Beige Book which is due to be released at 2 PM EDT.

Charter Communications Inc. (NASDAQ:CHTR) Suffers Biggest Loss In Nine Years On Subscribers Loss Concerns

Shares of Charter Communications Inc. (NASDAQ:CHTR) suffered their worst sell-off in nine years after the company reported bigger than expected loss of video subscribers. The second largest cable provider said it lost 122,000 video subscribers in the first quarter, nearly triple a loss of 43,000 that analysts expected.

Video Subscribers Loss

Shares of the company tumbled by 16% amidst growing concerns about the company’s ability to hold on to TV consumers as most people resort to streaming content. The disappointing results are a stark contrast to last year’s performance where the company posted an increase in video subscribers for the first time in nearly two years.

In their defense, Charter Communication’s executives attributed the loss to the disconnection of customers who did not pay their bills. The company insists the situation is temporary and that the trend should improve in the second quarter.

However, Charter Communications losses continue to raise serious doubts about its long-term prospects. The losses come barely two years after the cable giant acquired two other cable giants, Time Warner Cable and Bright House Networks that were expected to stabilize the ship.

However, that has not been the case, and it has since emerged that the company is struggling to integrate the three companies into a single pricing and packaging strategy. The cable-TV losses essentially paint a clear picture of how cable giants are struggling to hold on to subscribers as online TV providers led by AT&T Inc. (NYSE: T) DirecTV continue to cause havoc.

Focus On Broadband Business

While the loss is a big concern, Charter is not the only company feeling the pressure in the TV broadcasting business. Comcast Corporation (NASDAQ:CMCSA), the market leader, reported a loss of 96,000 video subscribers in the quarter, worse than 60,800 that analysts were expecting. The loss marked the fourth consecutive quarter that the company has recorded losses in its video unit.

A change in the way people consume content has forced the likes Charter Communications to tweak their core business with the focus now being paid on broadband business. Cable giants are increasingly supporting internet videos by providing high-speed broadband, needed to support streaming services of the likes of Netflix, Inc. (NASDAQ: NFLX). The change has already started to bear fruits, Charter having gained 331,000 internet subscribers in the first quarter.

Q1 Financial Results

Investors sent the stock spiraling lower, despite the company posting earnings per share of 70 cents, up from 57 cents a share reported a year ago. Earnings also beat Wall Street expectations of 55 cents a share.

Net income attributed to shareholders increased to $168 million from $155 million reported last year. Revenues, on the other hand, rose slightly to $10.66 billion compared to $10.16 billion reported a year ago. Q1 revenue also beat Wall Street revenue estimate of $10.62 billion.

During the quarter, the company purchased 2 million shares for approximately $683 million. Cash flows from operating activities totaled $2.7 billion compared to $2.8 billion as of the first quarter of 2017. Charter Communication ended the quarter with a total debt of $69.8 billion.