AT&T’s stock reached a multidecade low on Friday, and it appears that the decline will continue on Monday following Citigroup’s downgrade. The telecom industry’s historic use of lead-sheathed cables has been identified as a potential financial risk.
Analyst Downgrades AT&T Stock
In a note on Monday, analyst Michael Rollins downgraded AT&T (T) stock from Buy to Neutral/High Risk. He also adjusted the target price for the stock, lowering it to $16 from the previous $22.
On Monday, the stock experienced a 1.2% decline, trading at $14.32. On Friday, AT&T shares fell 4% to $14.50, marking their lowest close since 1994.
Concerns Regarding Lead-Sheathed Cables
According to an investigation by The Wall Street Journal published on July 9, AT&T, along with Verizon and other major telecom companies, owns a vast network of cables covered in toxic lead that spans across the United States. These lead-covered cables can be found on poles, soil, and water, posing potential health risks to workers and communities.
Citi’s Rollins stated that he is unable to precisely quantify the financial risks associated with these concerns. Nevertheless, he remains concerned about the possibility of further near-term downside risk and considers the current uncertainty as an overhang.
AT&T has not responded immediately to requests for comments. However, in response to The Wall Street Journal, the company expressed its belief that its cables do not pose a public-health hazard or contribute significantly to environmental lead levels when compared to other sources closer to people’s homes.
Citi Downgrades Other Telecom Stocks
Citi analysts also downgraded Frontier Communications (FYBR) and Telephone & Data Systems (TDS) to Neutral/High Risk from their previous Buy ratings in the same note.
J.P. Morgan Analyst Also Cuts Rating
J.P. Morgan analyst Philip Cusick joined Citigroup in downgrading AT&T’s stock on Friday. Cusick cited potential liability associated with lead-sheathed cables as one of the reasons for his decision. He lowered his rating to Neutral from Overweight and adjusted the price target to $17.
