AT&T has been a quiet battleground stock for years. Investors love the dividend but have questioned growth, debt levels, and competitive pressures. After a recent pullback in the share price, KeyBanc Capital Markets stepped in with a notable call: they upgraded AT&T from Sector Weight to Overweight and set a 30-dollar price target. According to their analysis, several factors are driving the improved outlook.
Competitive Fears Look Overdone
KeyBanc believes the recent dip was fueled by anxiety over wireless competition — concerns they now view as overblown. They argue competitive intensity isn’t meaningfully worsening, and in some cases it’s stabilizing. If accurate, AT&T’s stock weakness could represent an opportunity rather than a sign of deeper deterioration.
A Stronger Growth Outlook Ahead
The firm expects AT&T’s growth to improve gradually over the next several years. They project roughly 3 percent adjusted EBITDA growth in 2025, with acceleration toward 5 percent by 2027 and 2028. For a large telecom company, this level of consistency represents healthy progress following several restructuring phases.
The Push Into Convergence
A major element of the upgrade is AT&T’s focus on mobile and broadband convergence. The strategy bundles wireless service with fiber home internet and WiFi into a single package. This creates better customer stickiness, more pricing power and a clearer point of differentiation against competitors. KeyBanc sees this as a durable advantage moving forward.
A Massive Fiber Expansion
AT&T is working toward reaching roughly 60 million homes and businesses with fiber by 2030. This expansion matters because fiber users typically generate higher revenue per account, lower churn and better long-term profitability. If AT&T continues executing on this plan, the mix shift could strengthen the company’s financial profile for years to come.
A Valuation Argument Taking Shape
KeyBanc notes that AT&T currently trades near 6.2 times their 2026 EBITDA estimate, compared with a 10-year average closer to 7 times. That discount, combined with expected earnings growth, supports their 30-dollar price objective. They also highlight the potential for strong capital returns, with dividends and buybacks together representing an estimated 8.5 percent yield by 2026.
Risks Still Exist
Telecom remains a capital-intensive industry, and AT&T must navigate ongoing competition and the costs of its fiber buildout. Growth is steady but not explosive, and the success of the convergence strategy depends heavily on execution. Still, KeyBanc believes these risks are manageable given the current valuation and long-term strategy.
Bottom Line
The upgrade reflects KeyBanc’s belief that AT&T’s fundamentals are improving, the fiber strategy is gaining real traction and the stock is currently undervalued relative to its historical norms. For investors seeking cash flow, stability and moderate growth, the firm sees AT&T as positioned for a multi-year improvement cycle.