AT&T Inc.

T Details

AT&T Inc. (NYSE: T) is a telecommunications, media, and technology holding company with subsidiaries and affiliates worldwide. It has three operating segments: 1) Communications, which includes the Mobility, Business, and Consumer Wireline business areas in the United States and internationally, and 2) Information Technology. 2) WarnerMedia, a multinational entertainment company that produces and distributes films, television shows, video games, and other content in both physical and digital formats; and 3) Latin America, which provides entertainment and wireless services in Latin America and the Caribbean (under the Vrio brand) as well as Mexico.

Latest News:

• Expansion of Fiber Offering: On March 10, 2022, T announced that AT&T Fiber, the fastest internet among significant providers, is now offering up to 5-gigabit speeds throughout parts of its 100+ metro area coverage. With the introduction of 2-Gig and 5-Gig speed tiers in January, more than 7 million customer locations across 21-state footprint now have access to the fastest internet1 on the fastest-growing fibre network. Throughout 2022 and as part of its future expansion ambitions to cover 30 million client locations by year's end 2025, it aims to continue densifying multi-gigabit-capable equipment across its network.
• Enhancing the Consumer Engagement: On March 1, 2022, the Kandy Communications business unit of American Virtual Cloud Technologies, Inc., a global pioneer in secure and intelligent cloud communications, announced that IPTF Click-to-Connect is now available to AT&T IP Toll-Free (IPTF) consumers. AT&T, in collaboration with Kandy, is assisting more businesses in transforming their customer experience.

FY21 Results:

• Slight Decline in Revenues: Total operating revenues decreased 1.69% YoY to USD 168.86 billion during FY21 (ended December 31, 2021) from USD 171.76 billion during FY20, due to disinvestment in the US Video and other businesses partially offset by growth in revenue in WarnerMedia and Communication segment.
• Surge in Bottom Line: T reported a net income of USD 19.87 billion in FY21 compared to a net loss of USD 5.37 billion in FY20.
• Cash and Debt Position: As of December 31, 2021, the company's cash and cash equivalents stood at USD 21.17 billion, with a total debt of USD 178.70 billion.

Key Risk:

• Spectrum Risk: The capacity of WarnerMedia to distribute linear network feeds of its domestic cable networks to its affiliates could be jeopardized if the Federal Communications Commission (FCC) modifies the electromagnetic spectrum currently used for broadcast television and satellite distribution.

Outlook:

2022 Financial Outlook (Source: Investor Update Presentation, January 26, 2022) 

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

T's stock price has fallen 21.26% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 22.02 to USD 33.88. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 28.08.

Considering the correction in the stock price, expansion of its fiber offering, enhancing the customer engagement, strong bottom-line performance, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 22.91, down 1.21% as of March 14, 2022, at 11:50 AM ET.

Three-Year Technical Price Chart (as on March 14, 2022, at 11:50 AM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Dropbox, Inc.

DBX Details

Dropbox, Inc. (NASDAQ: DBX) is a collaboration platform that allows users to 1) Create, which includes Dropbox paper and doc scanners; and 2) Collaborate. 2) Search, rich previews, Dropbox Smart Sync, version history, third-party ecosystem, rewind, PC backup, passwords, and vault are among the features available. 3) Share includes folders, shared links, file transfers, file requests, and watermarking. 4) Collaborate, which includes annotations and comments, a file activity stream, viewer information and presence, as well as HelloSign, and 5) Safe, including features like encryption, file recovery, and administrator controls.

Latest News:

• Growth in VC Engagement: On January 12, 2022, DocSend, a secure document sharing platform and DBX, recently released new data based on its Pitch Deck Interest metrics, revealing that venture capital investor and founder activity significantly increased year over year (YoY) in Q4FY21 and FY21. In Q4, VC engagement with startup pitch decks hit an all-time high, up 55 percent year over year and 44 percent overall.

FY21 Results:

• Double-Digit Growth in Topline: The company reported a YoY growth of 12.75% in overall revenue to USD 2.16 billion in FY21 (ended December 31, 2021) from USD 1.91 billion in FY20, attributable to growth in average revenue per user.
• Reported Profits: In FY21, DBX reported net income of USD 335.8 million compared to net loss of USD 246.3 million in FY20.
• Cash and Debt Position: The company had USD 1.72 billion in cash and cash equivalents (including short-term investments) as of December 31, 2021, and total debt of USD 1.66 billion.

Key Risk:

• Voting Concentration Risk: Each share of DBX's Class B common stock has ten votes, compared to one vote for each share of its Class A common stock. As of December 31, 2021, its directors, executive officers, and other significant holders control 78.9% of the voting power, together with Mr. Houston (Co-founder and CEO) accounting for approximately 72.8% of the voting power. This constrains the ability of other shareholders to influence corporate decisions.
• Competition Risk: DBX competes in the highly competitive Application software business, including established competitors such as Apple, Google, Amazon, and Microsoft, which could put pricing pressure on the company. If the current trend continues, it could harm the company's financials.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

DBX's stock price has fallen 30.56% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 19.90 to USD 33.00. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 25.18.

Considering the significant correction in the stock price, strong financial performance, robust profitability margins, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 20.50, up 0.76% as of March 14, 2022, at 09:10 AM ET.

Three-Year Technical Price Chart (as on March 14, 2022, at 09:10 AM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.