Historically, AT&T’s (NYSE:T) stock has not shown much volatility compared to the broader market. For instance, last week the stock did not move much though Apple (NASDAQ:AAPL) unveiled the iPhone 4S, which will be available through AT&T, Verizon (NYSE:VZ) and Sprint (NYSE:S).
In our earlier note titled AT&T Could Gain the Most from the iPhone 4S Announcement, we discussed some of the positive factors that could support AT&T’s subscriber base growth. The iPhone 4S will support twice the download speed exclusively on AT&T’s network and Apple announced that the iPhone 3GS will be sold for free with a two-year contract for which AT&T is again the exclusive seller in the U.S.
Another indirect win for AT&T is that iPhone 4S coming on Sprint network is actually an advantage to AT&T in its pursuit for the $39 billion acquisition of T-Mobile. Sprint has argued in the past that AT&T/T-Mobile deal threatens to make the U.S. wireless market more concentrated, thereby deteriorating its chances of having access to better smartphones. Now that Sprint will have access to iPhone, will make this argument weak and AT&T’s case in acquiring T-Mobile strong.
We believe that markets may soon realize these positives in the making for AT&T, and so we see upside to shares. Our $39 price estimate for AT&T stock is about 35% above market price.
See our complete analysis for AT&T stock here
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