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AT&T Lifts HBO Subscribers Growth Forecast, Mulls International Expansion

AT&T recently provided its business and financial outlook, wherein the telecom company raised its long-term growth forecast for Home Box Office (HBO) subscribers on the back of its international expansion.

AT&T (T) said that it expects worldwide subscribers for HBO and HBO Max to reach 120-150 million by the end of 2025, which is significantly higher than its previous forecast of 75-90 million subscribers. Furthermore, it now expects revenues from the HBO business to more than double over the next five years.

For 2021, AT&T expects to end the year with a subscriber base of 67-70 million for HBO and HBO Max, reflecting year-over-year growth in the range of 9.8%-14.8%.

The company reiterated its consolidated revenue growth outlook of around 1%. Moreover, adjusted EPS is expected to remain stable compared to 2020. AT&T said that the international expansion of HBO Max and the launch of an advertising-supported (AVOD) version of HBO Max is likely to drive its subscriber base and revenues in 2021. (See AT&T stock analysis on TipRanks)

The company plans to expand HBO Max in 60 countries outside the United States this year and launch the AVOD version of HBO Max in the domestic market in June 2021.

Furthermore, AT&T announced that it has acquired 80 MHz (MegaHertz) of C-band spectrum during the recently held FCC’s Spectrum Auction 107. Of the total acquired spectrum, it plans to deploy 40 MHz this year. Overall, it will spend $6-$8 billion to deploy the C-band spectrum.

The company also remains focused on increasing its fiber footprint by adding 3 million additional customer locations across more than 90 countries.

On March 5, J.P. Morgan analyst Philip Cusick reiterated his Hold rating and price target of $32 (7.4% upside potential) on the stock. In a note to investors, Cusick stated that AT&T’s shares are likely to further appreciate following the March 12 analyst meeting. However, the analyst remains cautious about the stock in the mid-to-long-term period.

Overall, AT&T has a Moderate Buy consensus rating based on 4 Buys, 6 Holds and 1 Sell. The average analyst price target of $31.88 implies upside potential of 6.9% to current levels. Shares have lost about 4.9% over the past year.

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