Why is AT&T Inc. stock outperforming the market?

AT&T Inc. (NYSE: T) reported strong fourth-quarter 2024 financial results, with operating revenues of $32.30 billion, a 0.9% year-over-year increase, surpassing the analyst consensus estimate of $32.04 billion. The company achieved adjusted earnings per share (EPS) of $0.54, exceeding the expected $0.50, contributing to a 32% increase in its stock over the past year. Subscriber growth was robust, with 482,000 postpaid phone net additions and 307,000 AT&T Fiber net adds, both surpassing market expectations. The company's adjusted EBITDA rose to $10.8 billion from $10.6 billion, and net income increased significantly to $4.4 billion from $2.6 billion in the previous year. Analysts have responded positively, adjusting their price targets and ratings for AT&T. Ivan Feinseth from Tigress Financial upgraded the rating to Buy with a price target of $32.00, while Maher Yaghi from Scotiabank raised the stock to Sector Outperform with a target of $26.00. The average 12-month price target has increased by 9.42% to $27.77, indicating a favorable outlook. AT&T's strategic initiatives, including enhancing its voice core network through a partnership with Nokia and focusing on fiber expansion, are expected to drive future growth. Despite potential challenges like increased cash taxes in 2025, AT&T's organic growth is anticipated to mitigate these issues, positioning the company as a strong large-cap total return story with a focus on broadband growth and pure connectivity.