UBS downgrades AT&T, citing aggressive promotions

An AT&T employee assists a customer with a Samsung smartphone inside one of the company's stores in New York.
Michael Nagle | Bloomberg | Getty Images

UBS' John Hodulik, a top-rated analyst, downgraded AT&T to neutral from buy Wednesday, reducing his 12-month price target by 7 percent to $43 from $46 on expectations of lower earnings given aggressive competition in the space.

"We are lowering our EPS estimates by 3 percent to reflect the increased competitive intensity in wireless and incremental costs associated with AT&T's DTV Now rollout," wrote Hodulik in a research note.

Since 2009, Hodulik's recommendations have returned an average of 15 percent with a 78 percent success rate, according to TipRanks. That performance makes him a top 250 analyst on all of Wall Street, according to the site.

Here are the three main reasons why Hodulik predicts earnings growth is set to slow down: