UBS Downgrades AT&T on Wireless Competition Concerns, Cost of DirecTV Now Launch
UBS downgraded AT&T from buy to neutral based on wireless competition concerns and “expectations for lower earnings growth than we had originally expected,” UBS said in a Wednesday note to investors. UBS said it's reducing its earnings per share estimates…
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by 3 percent to $2.84 in 2016 to reflect “increased competitive intensity in wireless and incremental costs” tied to the DirecTV Now roll out (see 1609210048). UBS said earnings are likely to take a hit due to “1) diminishing benefits from the shift to installment plans, 2) limited upside to savings from lower volumes, and 3) ramping competitive intensity.” On DirecTV Now, an over-the-top service, UBS said: “We expect the cost of deployment of this new bundle and Sunday Ticket accounting to pressure Entertainment profitability in the near-term.”