AT&T Pushes Back Against Lead Contamination Concerns
AT&T is refuting concerns regarding its potential liability for contamination caused by lead-sheathed cables. Wall Street analysts are suggesting that the stock decline of both AT&T and its competitor Verizon Communications has been excessive.
Halting Removal Plans in Lake Tahoe
On Tuesday, AT&T announced that it would suspend its plans to remove two lead-clad cables in Lake Tahoe, opting instead for additional testing and discussions with regulators.
This decision is part of AT&T's response to reports from The Wall Street Journal, which raised concerns about the potential health hazards posed by copper telecommunications cables that have been wrapped in lead. In the aftermath of these reports, AT&T experienced its lowest closing share price in over 30 years on Monday, while Verizon hit a 13-year low.
Challenging The Wall Street Journal's Findings
Analysts Suggest Stock Declines Have Gone Too Far
Stock Market Analysis
The recent pressure faced by stocks has created a significant amount of uncertainty regarding potential liability. According to Brandon Nispel, an analyst at KeyBanc, estimates range anywhere from $5 billion to $50 billion. However, he believes that these estimates are already factored into current stock prices.
While acknowledging that AT&T may have a higher exposure due to its historic operations, Nispel suggests that favoring Verizon stock in the near term could be a prudent move. Nevertheless, he maintains Sector Weight ratings on both stocks, highlighting that their challenges extend beyond the issue of lead cables and include tough competition and low growth rates.
Oppenheimer analyst Timothy Horan brings further insight by indicating that the total industry liability is likely in the range of $2-20 billion, with the sector already experiencing a $30 billion hit due to this news. In terms of investment safety, Horan favors Verizon over AT&T due to its lower lead exposure. Oppenheimer rates AT&T as Perform with no target price and rates Verizon as Outperform with a target price of $43.
As of premarket trading on Wednesday, AT&T shares have risen by 4.2% to $14.02, while Verizon has experienced a 4% increase to $33.55.
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