Why J.P. Morgan Continues to Favor AT&T (T) Stock After Strong Q1 Results

Key Takeaways

Table of Contents

J.P. Morgan reaffirmed AT&T as a top pick, emphasizing infrastructure investments in fiber and 5G along with superior cost structure
First-quarter earnings topped expectations with $0.57 EPS versus consensus of $0.55, while revenue reached $31.51 billion
Convergence strategy gains traction: 45% of advanced home internet subscribers now bundle AT&T wireless services, marking a 3-point annual increase
Analyst Sebastiano Petti boosted 2026 EBITDA projection to $48.1 billion while maintaining $33 stock price target
Shares have climbed approximately 5% in 2025; current dividend yield stands near 4.2%

AT&T (T) stock began Monday’s session at $26.15, reflecting a roughly 5% gain year-to-date through the previous Friday. The telecommunications giant’s performance has closely mirrored the S&P 500, which has advanced 5.8% during the identical timeframe.

AT&T Inc., T

On Monday, J.P. Morgan reiterated its favorable stance on AT&T, maintaining the stock on its exclusive top picks roster. Analyst Sebastiano Petti highlighted the telecommunications provider’s ongoing fiber and 5G infrastructure expansion, along with favorable marginal cost dynamics compared to competitors T-Mobile and Verizon.

“We believe AT&T’s asset mix, strengthened by years of investment in fiber and 5G, and its marginal cost relative to competitors, positions the company well to drive share gains,” Petti stated in his research note.

AT&T unveiled its first-quarter financial results on April 22nd. The telecommunications leader delivered earnings per share of $0.57, surpassing Wall Street’s consensus forecast of $0.55. Total revenue registered at $31.51 billion, exceeding the $31.29 billion projection and representing 2.9% year-over-year growth.

Looking ahead to full-year 2026, AT&T provided earnings guidance ranging from $2.25 to $2.35 per share. Current analyst consensus centers at $2.31.

A particularly noteworthy metric captured Petti’s attention: 45% of subscribers using AT&T’s advanced home internet services now also carry AT&T wireless plans. This figure represents a three-percentage-point climb from the prior year and excludes newly acquired fiber customers from the Lumen transaction.

Petti interprets this data as validation that AT&T’s convergence approach is delivering results — combining 5G, fiber, and Wi-Fi services into integrated packages designed to enhance customer retention.

Financial Projections and Cash Generation

In response to the quarterly performance, Petti elevated his 2026 adjusted EBITDA forecast to $48.1 billion, incorporating anticipated growth in bundled subscriber relationships, recent pricing adjustments, and the Lumen asset contribution.

The analyst also increased his second-quarter projection for net postpaid phone customer additions to 330,000 from a previous estimate of 320,000. His Overweight recommendation and year-end price objective of $33 remain firmly in place.

Petti anticipates EBITDA and free cash flow per share will expand at compound annual growth rates of 4% and 12%, respectively, extending through the conclusion of 2028.

AT&T distributed a quarterly dividend of $0.2775 per share on May 1st, translating to an annualized yield of approximately 4.2%. The current payout ratio registers at 37.25%.

Wall Street Sentiment and Institutional Holdings

The overall analyst community maintains a generally positive outlook. Among 21 analysts monitored by MarketBeat, one rates the stock Strong Buy, thirteen assign Buy ratings, and seven maintain Hold recommendations. The average price target across analysts sits at $30.55.

Citigroup elevated its price objective to $31.50 with a Buy rating in March. Scotiabank adjusted its target downward to $31.00 in late April while preserving a Sector Perform rating.

Regarding institutional investment activity, Truist Financial expanded its AT&T holdings by 3% during the fourth quarter, purchasing an additional 163,766 shares to bring its total position to 5,694,478 shares valued at approximately $141.45 million. Multiple other institutional investors similarly increased their stakes in the third quarter.

AT&T’s 52-week trading range extends from $22.95 to $29.79. The stock’s 50-day moving average currently stands at $27.52, while the 200-day moving average is positioned at $26.05.

In related corporate developments, AT&T unveiled new cybersecurity solutions targeting small business customers this week, including the Dynamic Defense platform available on AT&T Business Fiber connections.

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