AT&T closes out the week with the bullish options momentum from last week's BNP Paribas upgrade now visibly cooling, even as analyst targets continue to edge higher.
The shift in options positioning is the clearest change since the September 25 note. The put/call ratio has climbed to 0.63 from 0.62 at the start of the week, still well below the 20-day mean of 0.72, but the gap has narrowed. The z-score, which stood near minus two standard deviations when BNP Paribas upgraded on September 21, has eased to minus 1.89. Call buying still dominates relative to recent history, but the pace of that shift has slowed. The stock is down 2.5% on the week to $24.48, reversing the gains that followed the upgrade, and the options market appears to be digesting that retracement rather than pushing back against it.
The lending market adds little to the story, which is itself notable for a telecom of this size. Short interest is just 1.8% of the free float, roughly 128 million shares, up around 6% on the week but down 7% over the past month. Borrow costs have fallen sharply, dropping more than 40% over the past week to just 0.23%. Availability is effectively unconstrained. There is no short-side pressure here. The stock's short score of 31.1 ranks in the 68th percentile, suggesting the lending market sees AT&T as a low-conviction short thesis.
Analyst conviction is still building, even if the stock isn't following. Morgan Stanley's Simon Flannery raised his target from $27 to $28 on September 28, maintaining Overweight. That follows BNP Paribas's upgrade to Outperform with a $30 target a week earlier. The mean price target has edged up to $29.05, implying around 19% upside from current levels. The analyst recommendation differential factor scores in the 92nd percentile, among the highest readings in the sector. Bears point to ARPU pressure in wireless, a legacy segment that could turn into an EBITDA drag beyond 2027, and a payout ratio expected to stay above 100% until at least 2028. Bulls counter with the 74-million postpaid customer base, the converged services growth roadmap, and cash flow from the DirecTV stake disposal. Wells Fargo stays at Underweight with a $20 target; the range remains wide. The valuation case looks grounded at a PE of 9.7 and EV/EBITDA of 6.6, both drifting lower over the past month as the price has retreated.
The stock has not been kind to contrarians recently. After the July earnings print, AT&T rose 3.1% the following day and added 7.5% over five sessions. The next quarterly results are due October 21, three weeks away. That print arrived after a quarter in which the stock briefly touched $26 following the BNP upgrade, only to give back most of those gains. The prior earnings beat, and the subsequent move, suggests the market rewards a clean execution quarter more than it punishes a slight miss. How the stock behaves between now and October 21, with targets rising but price falling, will be the primary test of whether last week's analyst optimism was a leading signal or a lagging one.
The closest peer, VZ, fell 1.0% on the week, a shallower decline than AT&T's 2.5%. BCE dropped 6.4% over the same period, the worst of the telecom peer group. AT&T's underperformance relative to Verizon, against a backdrop of higher analyst targets and easier borrow conditions, is the tension worth watching into the Q3 print.
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