Scotiabank Upgrades AT&T Following Q4 Print

Jay Oduwole of Scotiabank on Wednesday upgraded shares of AT&T Inc. (NYSE: T) to Sector Perform from Sector Underperform, with a price target lowered to $35 from a previous $36.

The analyst also notes that unless there is a “significant turnaround” in business, margins are unlikely to expand meaningfully in 2015. In addition, the high volume and churn environment will likely remain in 2015 and that average revenue per user will also remain under pressure.

Nevertheless, Oduwole does state that AT&T's reduction in capital expenditure, higher free cash flow, safer dividend with a lower payout ratio and potential synergies from DirecTV provides support for shares in the near to medium-term and limit downside risk.