AT&T upgraded to Outperform at Scotiabank on improved free cash flow

As previously reported, Scotiabank upgraded AT&T to Outperform from Sector Perform with an unchanged price target of $18.50. As the firm looks forward to 2024, it expects free cash flow to improve, supported by low capital intensity, improving operating earnings and reduced usage of working capital, the analyst tells investors in a post-earnings note. While wireless net phone loading is coming down, churn and ARPU trends remain positive and are acting to reduce the reliance on loading to meet profit growth goals, added the analyst. While Scotiabank doesn’t expect any dividend increases in the next two years, the company’s current dividend yield has “become hard to dismiss,” even when taking in the context of the overall higher rate environment, the analyst argues.