Jim Cramer: AT&T shares can go ‘much, much higher’ if management can deliver

AT&T shares are worth leaving in the portfolio, despite the sell recommendation recently issued by one industry analyst, CNBC’s Jim Cramer said Monday.

He doubled down on his belief that there is substantial upside in the stock price, thanks to activist investor Elliott Management’s position in the teleco giant.

“If AT&T were trading in the $40s or even the mid-$50s, where Elliott believes it can go if the company hits its long-term targets, then the stock would be a sell here,” the “Mad Money” host said. “But at $38, AT&T’s already trading like those estimates are unlikely. And, hey, if management can deliver, I see this stock going much, much higher.”

Cramer was responding to a thesis put forth by MoffettNathanson’s Craig Moffett, one of two analysts with sell ratings, according to FactSet. The firm in November downgraded the stock from neutral, assessing a “cloudier” path to meet its 2020 and three-year guidance. AT&T’s wireless business would need substantial growth in order to offset weakness elsewhere, Moffett said.

AT&T’s revenue is estimated to reach $182.8 billion in 2022, about 7% higher than the $170.8 billion it recorded in 2018, according to FactSet.

“Even if he’s right that it’s borderline impossible for AT&T to hit its forecasts for 2022, I don’t think any of the bulls are really banking on those numbers,” Cramer said. “This is a forced turnaround play, meaning Elliott Management is forcing AT&T to get its act together.”

“If you buy the stock here, you’re betting that the company has a lot of room to improve with more focused leadership,” Cramer said.

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