Research note · 8 October 2026
AT&T Inc. T
LONG price $24.87 · base case $41.25 · expected +50% over 540 days
The call
AT&T trades at $24.87, implying roughly -4.85% annual FCFF growth at the 8.28% WACC, well below its own historical growth band. Management guides low-single-digit service revenue growth, 3-4% adjusted EBITDA growth in 2026 improving to 5%+ in 2028, and free cash flow of $18 billion-plus in 2026 rising to $21 billion-plus in 2028. The base-case DCF, assuming 2.4% average FCFF growth within the historical band, values the equity at $41.25 per share, a 65.9% premium to the price.
Why the opportunity exists, in the desk's view: a narrative overshoot.
What decides the case
- Capex intensity and FCFF conversion
- Legacy segment decline versus Advanced Connectivity growth
- Effective tax rate normalization
What breaks the case
| Shock to the base case | Value per share | vs price |
|---|---|---|
| Base case as planned | $41.25 | 66% |
| Starting cash flow 10% higher | $47.22 | 90% |
| Growth 5 points higher every year | $55.53 | 123% |
| Discount rate 100bp higher | $33.02 | 33% |
| Starting cash flow 10% lower | $35.28 | 42% |
| Growth 5 points lower every year | $29.37 | 18% |
| Cost of debt 200bp higher | $35.06 | 41% |
The base case equals the price at a 10.6% discount rate, or if every year's growth were -7.2% points different. Thresholds, not forecasts.
Model-authored research with an editorial gate; every figure traces to the filing or a stated assumption and every calculation was reproduced before publication. Not investment advice. Do not redistribute.