AT&T shares hit 3-decade lows on lead wire riskafter analysts downgraded the stock following news that the telecommunications giant left toxic lead cables buried throughout the United States.
A July 9 Wall Street Journal report named AT&T and Verizon among several telecommunications giants that abandoned an extensive network of toxic lead underground cablesa large number of which could contaminate neighboring soil and drinking water sources.
Analysts at Citigroup and JPMorgan have lowered their recommendations on AT&T shares in recent days. The stock has lost a quarter of its value so far this year, down more than 12% since The Wall Street Journal report, and hit a low of $13.68. in the session on Monday, the lowest level since March 1993.
AT&T faces unquantifiable financial risks that would create “long-term glut” for the stockThe company likely has significant exposure to toxic lead wires because its network reaches about 40% of US homes, Citi analysts led by Michael Rollins said in an investor note.
Rollins cut his rating on AT&T shares to “neutral” from “buy” and cut his price target to $16 from $22.
“We have not seen, nor have regulators identified, evidence that legacy lead-clad telecommunications cables are a primary cause of lead exposure or the cause of a public health concern,” a US Telecoms spokesperson said in a statement. release.
JPMorgan analysts, led by Philip Cusick, on Friday downgraded their rating on AT&T to “neutral” from “overweight.”citing concerns over repeated downgrades for the company’s key fiber and wireless growth businesses, the high interest rate environment and new uncertainty over lead-coated cables.
“We have discussed the copper lead plating situation with many industry contacts and have not been able to find a reasonable way to calculate any potential liability, but we believe AT&T will have the most exposure given its massive LEC business [local exchange carrier] as well as ownership of AT&T’s original long distance networkJPMorgan wrote.
AT&T’s price/earnings ratio of 5.95 is below the industry average of 8.78, according to Eikon data.
Verizon shares were also down on Monday, falling 5.5% to $32.14, their lowest in nearly 13 years. Those stocks have lost more than 10% since The Wall Street Journal report.
“This situation deserves to be watched, (but) we don’t expect the telecommunications industry to take any substantial legal responsibility,” Morningstar analyst Michael Hodel said on Friday.
Source: Ambito
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