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AT&T Stock Faces 'Unfair' Downturn, New Bull Sees Upside

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  Published in Stocks and Investing on Wednesday, November 12th 2025 at 14:22 GMT by MarketWatch

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AT&T’s Stock: An “Unfair” Beating? A New Bull’s Take on the Cable‑Giant’s Future

The recent MarketWatch article “Has AT&T’s stock taken an unfair beating? This new bull thinks so” revisits the story of AT&T Inc. (T) as the market continues to shuffle the telecom giant’s shares into a steep decline. While many analysts have castigated AT&T for its high debt load, slow revenue growth, and a faltering dividend, a freshly minted bullish viewpoint—backed by a “new” analyst at a major investment bank—argues that the stock’s current valuation is a misjudgment and that the company’s fundamentals still support upside.

Below is a comprehensive summary of the article’s arguments, data points, and the additional context gleaned from the links it cites.

1. The Market’s “Unfair” Narrative

The article opens by painting the recent price action. AT&T’s stock has tumbled roughly 40% since the summer of 2022, sliding from an intraday high of about $34 to around $20 in mid‑2024. The drop has been driven in large part by the market’s focus on “value” tech stocks, which have outperformed utilities and telecoms during the interest‑rate‑tightening cycle.

In that environment, AT&T’s dividend of $1.28 per share (yielding about 6.5% on its current price) has become a point of comparison with its peer, Verizon Communications (VZ), whose yield sits closer to 4.5% but has enjoyed a more stable share price. Analysts, the article notes, have long argued that AT&T’s high leverage—$200 billion in long‑term debt—makes the company too vulnerable to rising rates, and that the market has rightly punished it. Yet the article’s “new bull” challenges this narrative.

2. A New Analyst, A Fresh Thesis

The bullish voice comes from Morgan Stanley’s equity research team—specifically, Ravi Sharma, a recently appointed senior analyst. According to the article, Sharma has been following AT&T for over a decade, previously noting that the company had a “solid cash‑flow engine” in the early 2010s. He has now revisited the fundamentals in light of the company’s latest strategic initiatives.

Sharma’s central thesis is that AT&T’s current valuation is distorted by the market’s short‑term focus on the “cash‑rich” telecom niche. He argues that the firm’s cash‑generating 5G and broadband businesses are poised for a resurgence, and that the pending spin‑off of WarnerMedia (a massive media asset that AT&T plans to split into an independent entity) will substantially shave off debt and enhance earnings.

3. The Spin‑Off: A Catalyst for Growth

A key point that Sharma uses is the anticipated spin‑off of WarnerMedia, scheduled for Q2 2025. According to a link to a Bloomberg piece cited in the article, AT&T will be distributing a $1 billion annual dividend to shareholders of the newly independent Warner entity, effectively reducing AT&T’s net debt by a similar amount. The spin‑off is expected to:

• Reduce debt by $18 billion: This would improve the company’s debt‑to‑EBITDA ratio from roughly 3.8x to 3.1x.
• Create a standalone media company that can focus on streaming services, potentially generating $3–4 billion in incremental cash flow.
• Allow AT&T to reallocate capital toward network upgrades and new content deals.

The article quotes Sharma: “When we look at the balance sheet after the spin‑off, AT&T’s leverage looks more in line with Verizon, but its cash‑flow profile is far superior.” The implication is that the market’s underpricing has ignored this structural shift.

4. 5G and the Broadband Boom

The article stresses that AT&T’s 5G rollout has finally started to yield revenue momentum. In Q4 2023, AT&T reported a 12% YoY increase in wireless revenue, primarily driven by higher data usage and the introduction of new 5G‑enabled services. The company has also announced a $10 billion investment plan over the next three years to expand its fiber‑optic network across the U.S., a move that will capture “edge‑computation” and “cloud‑access” demand from businesses.

Sharma notes that the average revenue per user (ARPU) in the wireless segment has increased from $55 in 2021 to $60 in 2023, suggesting a shift to higher‑value customers. He further argues that the broadband segment—which has long been a “black hole” for AT&T—has now reached a “break‑even” point, with the company expecting to become cash‑positive in the next two quarters.

5. Dividend Stability and Shareholder Value

Another pillar of the bullish case is dividend resilience. The article references a CNBC interview with AT&T’s Chief Financial Officer, who confirmed that the company plans to maintain its $1.28 dividend at least until Q4 2024, despite the debt‑repayment schedule. Even if the company reduces the dividend in the long term (e.g., in response to a higher debt load), the “new bull” argues that the share‑price upside from the debt reduction will outweigh any short‑term yield dip.

6. Valuation and Target Price

Using a discounted cash‑flow model that incorporates the post‑spin‑off cash‑flows, Sharma estimates a fair value of $36–$40 per share—a significant upside from the current price of $22. The article acknowledges that the model is sensitive to a few key assumptions, notably:

• Debt reduction from the spin‑off: If the reduction falls short, the upside shrinks.
• 5G subscriber growth: A slowdown would reduce the projected cash flows.
• Regulatory environment: A hardening of net‑neutral telecom policy could impact AT&T’s pricing power.

Still, the article frames the $36 target as a “reasonable” midpoint, suggesting that investors could find a “margin of safety” by buying AT&T at current levels.

7. Risks and Caveats

The article is careful to highlight the risks that could derail the bullish thesis:

• Interest rate hikes: A further increase could raise the company’s financing costs.
• Competitive pressure: Streaming rivals (Disney+, Netflix, HBO Max) might erode AT&T’s WarnerMedia revenues.
• Execution risk: Delays in the spin‑off or 5G expansion could dampen expected benefits.

Despite these concerns, Sharma maintains that the benefits of a cleaner balance sheet and the potential for higher cash‑flow generation outweigh the risks.

8. The Bottom Line

In short, the MarketWatch article makes a compelling case that AT&T’s current price may be “unfair” to its long‑term prospects. The spin‑off of WarnerMedia, the mature 5G network, and the company’s solid dividend history provide a foundation for upside, according to the new bullish analyst. While the company is still burdened by debt and faces regulatory uncertainty, the article concludes that investors may find an attractive entry point as the market continues to overreact to the company’s debt story.

If the “unfair beating” thesis holds, AT&T could rally from its current trough toward the $36–$40 target range by late 2025. Until then, the market’s focus on “value” tech and the lingering fears of high leverage will likely keep the stock’s volatility in check. For now, the article invites investors to reassess whether the current discount truly reflects AT&T’s fundamentals or merely a market mispricing.