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Turnaround for AT&T
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September 16, 1997: 6:31 p.m. ET
Telecom giant's shares rebound as other blue-chip stocks lose ground
From Correspondent Katherine Barrett
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NEW YORK (CNNfn) - For much of this year, it was a stock only a mother could love. From January to April, AT&T shares tumbled 25 percent to below $31 a share. But the stock has recouped those losses and more, and now trade at a 12-month high.
Third-quarter earnings are expected to show improvement in cost controls and in AT&T's core long-distance business. Competition from regional bell companies appears for now to be stuck on hold.
Long-time AT&T booster, analyst Stephanie Comfort of Morgan Stanley Dean Witter, says the stock could hit $50 a share by year-end.
"For the near term, the momentum in the long- distance business appears to be getting better, so a lot of the concerns are out of the stock," said Comfort.
According to First Call, a majority of brokerages are still not recommending AT&T. Skeptics point to the company's leadership vacuum at the top as it still hunts for a successor to Chairman Robert Allen. John R. Walter had previously been named as Allen's heir apparent, but resigned from the company less than one year as president and chief operating officer. Walter's decision to leave came after the board of directors would not elevate him to chief executive officer.
There are also many questions about how AT&T will compete in local telephone markets and the Internet business. One analyst says AT&T's stock is benefiting as big investors shy away from pricier blue-chip rivals.
"A lot of this market, portfolio managers have been in a lot of highly liquid, large-cap, multinational issues like Coke and Gillette, and they've jettisoned those earlier. So they've been looking for companies with strong brand names that haven't participated in the rally," said Anthony Ferrugia, an analyst for A.G. Edwards.
Those who call AT&T an under-owned and under-loved stock insist it has room to move even higher. By many market measures, it is one of the cheapest stocks in the S&P 500.
AT&T stock was up 11/16 to 44-7/8 on the New York Stock Exchange.
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AT&T
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