AT&T’s stock is emerging as the most compelling opportunity in the wireless telecommunications sector heading into the final quarter, according to a new analysis from BNP Paribas. On Monday, BNP Paribas analyst Sam McHugh raised his rating on AT&T shares from neutral to outperform, describing the stock as “the best way to play tailwinds in wireless.」
The upgrade comes despite a sluggish start for AT&T this year. However, McHugh argues that many of the risks previously worrying investors—such as increased competition in both wireless and internet services, the disruptive potential of SpaceX’s telecommunications ambitions, and the threat of AI-driven bill renegotiation—have already been priced in.
“The sector is running out of new things to worry about,” McHugh wrote. He noted that while these risks remain, the element of surprise has diminished. AT&T, which holds the smallest market share among the top three U.S. mobile carriers, is arguably the least exposed to competitive pressures from SpaceX’s mobile satellite ambitions.
McHugh highlighted several operational positives supporting the upgrade. He pointed to benefits from recent price increases on wireless plans and a “muted” third-quarter iPhone launch cycle. A less vigorous upgrade cycle typically allows carriers to reduce device subsidies, a major cost center, thereby protecting profit margins. The analyst stated, “We see the company beating on wireless volumes, price and profits simultaneously, leaving investors little to quibble with on the mobile side.”
Looking further ahead, McHugh believes the industry may have more room to raise wireless prices than the market currently acknowledges. He addressed investor skepticism regarding AT&T’s average revenue per user (ARPU), noting that ARPU has not kept pace with inflation. However, he argued that sector consolidation has enabled all three major players to generate acceptable returns without needing explosive growth.
In conjunction with the rating change, McHugh raised his price target for AT&T to $30, implying approximately 18% upside from previous levels.
In morning trading on Monday, AT&T shares rose fractionally. By contrast, rival T-Mobile US saw its stock drop 3.2%, trending toward its lowest closing level since May 2024. Verizon Communications shares were also down slightly. Data references in the report also tracked SpaceX’s broader market activity, noting a 2.34% increase in related sentiment.
T-Mobile dropping while AT&T rises is interesting. Is this just rotation or do they see something different?
Finally, someone sees the value here. iPhone subsidies dropping is a real margin driver most ignore.
SpaceX fears already priced in sounds like a stretch to me. I wonder how long that optimism lasts.