AT&T: UBS sees simplified structure, improved visibility from Discovery deal

Chunghwa Telecom Co

21/05/2021 13:28

** UBS upgrades the media and telecom co's shares  T.N  to
"buy" from "neutral" rating, citing valuation; hikes PT to $35
from $32
    ** Shares rise 1.5% to $30.09 in premarket trade
    ** Analyst John C. Hodulik sees "favorable risk-reward" at
the current valuation, given a simplified set of
connectivity-based assets, lower dividend payout, better
visibility into EBITDA growth and lower leverage
    ** UBS says the structure of the deal with Discovery
 DISCA.O  will provide an estimated ~$7-8 per share in one-time,
tax-free payment, equating to 4-5 years of dividend payment in
lump-sum
    ** "Growth in Wireless & Fiber along with additional cost
cutting to more than offset legacy declines, supporting L-MSD
EBITDA growth" - UBS
    ** UBS adds T's target for $20 bln in free cash flow (FCF)
is achievable
    ** "Capital intensity should ease beyond 2023, paving the
way for buybacks 2 years earlier than expected" - UBS
    ** Of 30 brokerages, 9 rate the stock "buy" or higher, 15
"hold" and 6 "sell" or lower; median PT is $30 - Refinitiv data
    ** UBS raised PT of $35 is 18.1% upside to last close
    
    

 (Reporting by Siddarth S)
 ((Siddarth.s@thomsonreuters.com;))