What could qualify as a disaster at AT&T (NYSE:T), one of the biggest telecom companies on Earth? How does a 10.4% drop in the share price sound in just one day’s trading? It’s already the single biggest one-day loss that AT&T has seen in years, and most of the problem traces back to earnings.
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AT&T’s earnings report turned out to be a mixed bag, with a win for earnings but a loss for revenue. AT&T posted $0.60 per share against analyst expectations looking for $0.58. Revenue, however, faltered, as AT&T put up $30.1 billion against analysts’ expectations of $30.2 billion. But without question, the biggest sock in the teeth for AT&T was a matter of free cash flow. Free cash flow came in at $1 billion, but analysts were looking for better than three times that figure at $3.2 billion.
AT&T did have something of an explanation for that, noting that payments for devices tended to lag a bit, particularly in the first quarter. AT&T’s CFO, Pascal Desroches, noted as much during the earnings call, and other AT&T brass echoed his sentiments. Yet despite this drop, AT&T offered up a positive outlook. Company brass noted their confidence that the $16 billion in free cash flow AT&T expects to generate for 2023 should still happen. Analysts, however, weren’t so sure, as KeyBanc’s Brandon Nispel noted that overall earnings were “largely below expectations.”
Nispel’s skepticism is echoed through much of Wall Street. Currently, consensus calls AT&T stock a Moderate Buy, with three Buy ratings against eight Holds. Nevertheless, AT&T also boasts an upside potential of 23.4% thanks to its average price target of $21.78.
