Wolfe Research has moved AT&T's rating up to Outperform from Peer Perform, citing a combination of improving operating performance and a valuation that, in the firm's view, understates the company's medium-term earnings potential. The brokerage set a $29 price target, which implies roughly 26% upside from the stock's recent close.
The upgrade follows AT&T's second-quarter results, which came in stronger than Wolfe expected. The report highlighted stabilizing subscriber trajectories, resilient pricing dynamics and an acceleration of share repurchases, alongside a reaffirmation of the company's 2028 financial targets. Wolfe said investor worries about deteriorating churn and rising pricing pressure have eased in the wake of those results.
Operational signals
Wolfe pointed to specific customer metrics as evidence of improving execution. Postpaid phone churn declined to 0.86% in the second quarter despite a recent price increase, and lower device upgrade rates combined with steady subscriber additions suggest the company's bundling approach - pairing wireless with fiber - is helping retain customers. The brokerage views these trends as supportive of future cash flow and shareholder returns.
Valuation and financial outlook
On valuation, Wolfe observed that AT&T trades at about 9.5 times earnings and yields 4.8% on its dividend, levels it considers inconsistent with the company's longer-term earnings trajectory. The firm projects adjusted earnings per share of roughly $2.90 by 2028, which equates to an estimated 11% EPS compound annual growth rate. Wolfe also cites potential annual total returns around 16% when combining expected earnings growth, dividend income and buybacks.
In conjunction with the upgrade, Wolfe raised several 2026 forecasts. The firm increased its estimates for postpaid phone net additions, wireless service revenue, adjusted EBITDA and earnings per share. Its updated 2026 expectations include adjusted EBITDA of $48.2 billion, EPS of $2.34 and an acceleration of share repurchases to $10 billion for the year.
Starlink remains a monitored risk
While endorsing AT&T's near-term setup, Wolfe reiterated that SpaceX's Starlink represents a longer-term competitive threat. However, the brokerage stated that meaningful disruption from Starlink would likely require several years for spectrum acquisition and the completion of regulatory approvals, and therefore is unlikely to materially disturb the U.S. wireless market before at least 2027. That timeline led Wolfe to weigh current execution and cash flow trends more heavily in its investment thesis.
Overall, the firm concluded that improving fundamentals, a sizable dividend yield and a low earnings multiple justify an Outperform rating at the present time, even as it continues to track the multi-year Starlink risk.
Context and implications
Investors should note that Wolfe's upgrade reflects both operational improvements - such as reduced churn and bundled-service loyalty - and a recalibration of expectations for returns from buybacks and organic earnings growth. The brokerage's view emphasizes measurable metrics that influence cash flow, rather than near-term speculation about satellite-based competition.