AT&T Posts Q3, Shorts Retreat and Analysts Trim Targets

AT&T reported Q3 results on October 21 with the stock holding firm at $23.42, up 2.5% on the week, as the short book that had been building into the print continues to unwind and analysts grow more cautious on the price target even as the buy consensus holds.

The short-side story has changed materially over the past two weeks. Short interest peaked near 144 million shares in early October, a level that prompted the October 14 note to flag the fastest pace of accumulation in months. That build has since reversed. The short book now stands at 132.7 million shares, 1.87% of the free float, down more than 8% on the week. The borrow market offers no friction whatsoever. Cost to borrow has eased to 0.39%, down about 10% on the week, and availability remains vast: well over 3.8 billion shares are available to lend against the existing short position, an availability ratio above 7,700%. For context, that means lenders hold roughly 77 shares available for every one already borrowed. This is as unconstrained a borrow market as it gets, and anyone who shorted into the earnings week did so with no cost penalty and unlimited supply. The put/call ratio at 0.63 is marginally below its 20-day average of 0.64, and the z-score of negative 0.44 puts options positioning close to neutral. Neither the options market nor the lending market is flashing anything unusual post-print.

The analyst picture is where the more interesting tension sits. The consensus stays at buy, with 10 buy ratings, but the target-price direction has been downward since the summer. Scotiabank cut its target twice in early October, from $29.25 to $27.50 and then again to $26.50, while keeping a Sector Perform rating. Morgan Stanley, which holds an Overweight, lifted its target modestly to $28 in late September. The stock at $23.42 still implies meaningful upside to most targets, but the drift lower in the Scotiabank numbers reflects a Street that is becoming more careful about the pace of AT&T's execution rather than abandoning the thesis. The bull case rests on a 74 million postpaid customer base, converged-services growth ambitions, and free cash flow recovery. The bear case centres on declining ARPU in wireless, a legacy segment that looks likely to become an EBITDA drag beyond 2027, and a payout ratio expected to remain above 100% for the foreseeable future. On valuation, the PE multiple has compressed by roughly 0.9 turns over the past month to 9.3x, and the price-to-book has fallen 0.13 in the same window. EV/EBITDA at 6.4x has been broadly stable.

Factor scores add colour without changing the story. AT&T's dividend score ranks in the 84th percentile of the universe, reflecting yield as the stock's primary draw. EPS surprise sits at the 74th percentile, a reasonable record of beating estimates. Momentum is the soft spot: the short score of 32 has drifted up slightly this week but remains in a range that signals no particular stress, and the sector score sits at exactly the 50th percentile. Retail attention picked up through October 10, with the Wikipedia-based attention signal running 1.47 standard deviations above its 90-day average, likely a function of the earnings date approaching rather than any fundamental development.

The institutional register is stable. BlackRock holds 8.2% and remains the largest disclosed holder. State Street added roughly 18.5 million shares in the most recent period reported, a meaningful addition for a passive manager. No 13D activist is on the register, and insider activity in the filing window has been limited to routine equity compensation transactions and a tax-withholding sale, all graded significance 1 out of 10 by ORTEX.

Close peers moved broadly in line. VZ gained 2.3% on the week against AT&T's 2.5%, and BCE added 1.7%. The alignment across the telecom sector suggests the week's move in T was sector-driven rather than name-specific reaction to the earnings release. What to watch from here is whether the short book continues to normalize toward its late-September baseline or whether fresh accumulation returns once Q3 details are fully digested, particularly around wireless ARPU trends and any update on the pace of copper network retirement.