PreMarket Prep Stock Of The Day: AT&T

“Guidance trumps earnings” is a commonly used phrase on Benzinga’s PreMarket Prep show. That is certainly the case with AT&T Inc. (NYSE: T) after its fourth-quarter report. The corresponding price action makes it the PreMarket Prep Stock Of The Day.

AT&T Finds A Bottom In December: Following its announcement of financial engineering last May, the issue went into a freefall. That instigated a seven-month losing streak that did come to an end until December at $22.02. That marked the lowest level for the issue since it bottomed during the financial crisis in October 2008 at $20.90.

The rebound off that low was capped at $27.48 on Jan. 19.

Profit Taking In AT&T Ahead Of Q4 Report: Following its triple top just under the $27.50 area, the issue retreated with the broad market. After putting in a pair of lows a the $25.70 area on Monday and Tuesday, it rebounded to end Tuesday’s session at $26.48.

AT&T Posts Q4 Beat, But Lower Guidance: Before the opening Wednesday, the company announced fourth-quarter adjusted EPS of 78 cents, which beat the 76-cent estimate along with a sales of $40.96 billion, which beat a $40.43-billion estimate.

AT&T lowered EPS guidance for FY22 adjusted EPS to a range of $3.10-$3.15 vs. the $3.21 estimate.

PreMarket Prep's Take On AT&T: When the issue was being covered on the show, it was trading at $27.
Co-host Dennis Dick, who has been bearish on the issue for quite some time, stated: “It benefited from the value trade. The dividend is going to be cut [and] I do not like it.”

The author of this article, who is long the issue, noted the importance of holding $27 early on.

If the stock is unable to hold that level, the issue could easily surrender some of the premarket gains. The beating it is taking was unexpected. 

AT&T Price Action: As it turns out, the opening tick of $26.98 has turned out to be the exact high for Wednesday's session. In a delayed reaction to the lower guidance, the issue is having its worst day in months.

In a stunning reversal, it has continued to make new lows for the session. After being in the green by 50 cents, it is now in the red by $2 at $24.46 as of 1:35 p.m. EST.

Based on the daily charts, the next potential area of support comes in at the pair of lows from Dec. 21 ($24.20) and Dec. 22 ($24.24).

The full discussion on the issue from Wednesday’s show can be found here: