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UBS upgrades AT&T, says simplified company is a buy after this week's dip

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John Stankey, President & Chief Operating Officer of AT&T and Chief Executive Officer of WarnerMedia, speaks onstage at HBO Max WarnerMedia Investor Day Presentation at Warner Bros. Studios on October 29, 2019 in Burbank, California.
Presley Ann | Getty Images Entertainment | Getty Images

The simpler version of AT&T without its media assets has attractive upside, and investors should take advantage of the recent dip, according to UBS.

UBS' upgrade of AT&T's stock came four days after AT&T's deal with Discovery to spin off WarnerMedia and combine it with the entertainment company. Since the deal was announced Monday, AT&T's stock has dropped 8%.

UBS analyst John Hodulik raised his rating to buy from neutral, saying in a note to clients on Friday that the leaner version of AT&T had a clearer pathway to improving its cash-flow growth. He also said shareholders would benefit in other ways even as the dividend is cut.

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