Shares of AT&T Inc. edged down 0.2% to $28.76 in pre-market activity Friday, even as RBC Capital Markets increased its price target on the telecom giant to $31 from $29, reiterating an Outperform rating.
Inflation Data Takes Center Stage
The modest move precedes the release of the U.S. Consumer Price Index (CPI) report for January, scheduled for 8:30 a.m. ET. Economists surveyed by Reuters anticipate a 0.3% monthly increase for both the headline and core indexes, which exclude volatile food and energy prices. This data is critical for shaping expectations around the Federal Reserve's interest rate path.
RBC Highlights Cash Flow and Fiber Strategy
RBC's bullish update cites growing confidence in AT&T's financial trajectory following year-end results and segment restatements. Analyst Jonathan Atkin emphasized the company's fiber network expansion as a key long-term growth driver. He suggested that accelerating the phase-out of legacy services could lead to significant free cash flow (FCF) growth extending into 2028 and beyond.
Free cash flow is a vital metric for telecom companies, representing the capital available for dividends, debt reduction, and potential share buybacks after accounting for capital expenditures.
Recent Performance and Sector Context
AT&T's stock gained 1.16% on Thursday to close at $28.80, marking its third consecutive daily advance. Trading volume was notably above its 50-day average. The stock remains approximately 3% below its 52-week high from September.
The telecom sector broadly found support recently, with Verizon reaching a new 52-week high and T-Mobile also advancing, even amid broader market weakness.
Last month, AT&T provided 2026 adjusted earnings guidance of $2.25 to $2.35 per share, exceeding analyst expectations. The company is banking on its investments in fiber-optic infrastructure and wireless spectrum to fuel this growth.
