Key Stats for AT&T Stock
- Past-30-Day Performance: 20%
- 52-Week Range: $23 to $30
- Valuation Model Target Price: $33
- Implied Upside: 18%
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What Happened?
AT&T stock rose about 20% in the last 30 days, recently trading near $28 per share as investors reacted to strong fourth quarter earnings and improved 2026 guidance.
The stock moved higher because AT&T exceeded its 2025 financial targets and projected stronger earnings and cash flow growth into 2026.
Adjusted EPS rose more than 20% to $0.52 in Q4 and nearly 9% for the full year to $2.12, while full-year free cash flow reached $16.6 billion.
Management guided to 2026 adjusted EPS of $2.25 to $2.35 and free cash flow of at least $18 billion, alongside consolidated adjusted EBITDA growth of 3% to 4% in 2026.
CFO Pascal Desroches said the company “had a strong finish to the year and met or exceeded all of our 2025 financial guidance.”
Operational momentum reinforced the rally. In 2025, AT&T delivered over 1.5 million postpaid phone net adds for the fifth consecutive year, more than 1 million AT&T Fiber net adds for the eighth consecutive year, and 875,000 Internet Air net adds.
Advanced Connectivity now represents about 90% of revenue and over 95% of adjusted EBITDA, underscoring the company’s shift toward higher-quality 5G and fiber earnings streams.
Institutional positioning also supported sentiment. NEOS Investment Management increased its AT&T stake by 51% in Q3 to 912,000 shares worth about $26 million, while Public Sector Pension Investment Board boosted its position by 141% to 2.9 million shares valued near $82 million.
Although Aberdeen Group reduced its stake by 19% to 4.9 million shares worth about $140 million, institutional investors collectively own about 57% of AT&T shares.
Accumulation by several large funds alongside improving financial visibility helped reinforce investor confidence during the month.
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Is AT&T Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 2%
- Operating Margins: 22%
- Exit P/E Multiple: 10.5x
Revenue expectations reflect steady wireless service growth and continued fiber expansion rather than aggressive top-line acceleration.
Revenue is projected to rise from approximately $126 billion in 2025 to about $129 billion in 2026, consistent with low single-digit growth.
Growth in 2026 is expected to be driven by fiber expansion and deeper penetration. AT&T plans to increase its fiber footprint from 32 million locations at the end of 2025 to over 40 million by the end of 2026, materially expanding its addressable base for broadband and wireless convergence.
Convergence remains a central earnings lever. The fiber convergence rate improved 200 basis points year over year to 42% in 2025, and management has outlined plans to push that metric toward 50% over time.
Converged customers typically churn less and attach more services, supporting margin durability and long-term free cash flow stability.
Free cash flow is expected to reach at least $18 billion in 2026, supported by EBITDA growth and cost transformation initiatives, including more than $4 billion in targeted cost savings through 2028.
As capital intensity gradually declines from peak 5G and fiber investment levels, a greater portion of earnings should convert into cash.
Based on these inputs, the valuation model estimates a target price of $33, implying about 18% total upside from current levels. With an annualized return above 6%, the stock screens as undervalued under a 6% hurdle framework.
At around 9x earnings and offering a dividend yield near 4%, AT&T appears undervalued heading into 2026.
This year’s performance is likely to be driven by fiber penetration, sustained wireless subscriber growth, improving free cash flow, and disciplined capital allocation rather than rapid revenue acceleration.
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