AT&T: Multiple Disappointments In Q4 Results Confirmed Structural Challenges
(Preview) Company Update (T US) (Neutral)
Summary
AT&T stock closed down 8.4% after Q4 2021 results. We believe investors were unnerved by evidence of structural challenges.
The key Mobility segment saw postpaid net adds decelerated in Q4 even as competitors accelerated, and EBITDA fell sequentially.
WarnerMedia saw EBITDA down 20% from Q3 and 38% year-on-year. Content costs are rising and are guided to peak in 2022.
Consumer Wireline broadband net adds turned negative, Business Wireline EBITDA declined again. 2022 EPS and Free Cash Flow are to be lower.
Ultimately, despite superficially attractive valuation including a 7-8x P/E, we believe the structural challenges at AT&T are too great. Avoid.
Introduction: Why Is AT&T Stock Down?
AT&T Inc. released Q4 2021 results Wednesday morning (January 26).
AT&T stock closed down 8.4% for the day, while Discovery, which has agreed to merge with AT&T's WarnerMedia business, closed down 9.2%.
We initiated our Neutral rating on AT&T in July 2021. Since then shares have lost 13.5% (after dividends…