Shares of telecommunications company AT&T (NYSE:T) are rising higher in pre-market trading today after the stock hit a new 30-year low on July 18. The stock plunged to $13.43 in yesterday’s trading session following a Wall Street Journal report that said telecom companies including AT&T, Verizon (NYSE:VZ), Frontier (NASDAQ:FYBR), and Lumen (NYSE:LUMN) could face potentially billions of dollars in environmental litigation charges. T stock is up over 4.3% in pre-market trading as of the last check.
The report is based on the Journal’s own investigation of thousands of “dead” lead cables lying under the water, in the soil, and on poles across the U.S. These lead-laden wires could pose serious health and environmental hazards, the report stated.
AT&T’s History with Lead-Laden Cables
AT&T had committed to removing two lead-clad wires from Lake Tahoe in 2021 as part of a settlement when the California Sportfishing Protection Alliance sued the company on similar accounts. However, on July 18, the company announced its decision to not remove the lead wires and instead hold its own investigation to study the impact of damage from the dead cables. The media company first published the report of 2,000 dead lead-clad cables on July 9, after which the stocks of telecom companies have been on the decline, also in part due to analyst downgrades. These wires were planted decades ago when the traditional Bell System telephone networks were in use.
As part of the investigation, AT&T will test any current or former workers who have worked with such lead-clad cables. Plus, it will undertake additional testing at sites recognized in the Journal’s report to see the potential impacts. Moreover, AT&T is contesting the Journal’s findings that quote higher concentrations of lead on the cables in Lake Tahoe against its own findings. The financial damages, if any, emerging from the potential litigation could take years to resolve. AT&T will ponder whether to remove the two lead-clad cables from Lake Tahoe once its investigation is complete.
Is AT&T a Buy, Sell, or Hold?
Wall Street analysts remain cautiously optimistic about AT&T stock’s future following the Journal’s findings. The stock has garnered a series of downgrades owing to the uncertainty relating to the potential financial charges from the lead-clad cable issue.
On TipRanks, AT&T has a Moderate Buy consensus rating based on six Buys and eight Hold ratings. Also, the average AT&T price forecast of $21.36 implies 58.8% upside potential from current levels. Meanwhile, T stock has lost 24.9% year-to-date.
