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AT&T told Citi that lead inside their network is a small percentage of the overall infrastructure, based on a Monday note by the firm.
Ronald Martinez/Getty Images
AT&T
stock closed at a multidecade low on Friday—and it looks set to fall even further Monday after Citigroup lowered its rating, citing potential financial risk from the telecom industry’s historic use of lead-sheathed cables.
Analyst Michael Rollins downgraded AT&T (ticker: T) stock from Buy to Neutral/High Risk in a note on Monday. He lowered his goal price for the stock to $16 from $22 earlier.
The stock was down 1.2% to trade at $14.32 on Monday. On Friday, AT&T shares fell 4% to $14.50, their lowest close since 1994.
AT&T,
Verizon
,
and other telecom giants own a big network of cables covered in toxic lead running across the U.S., based on an investigation by The Wall Street Journal published on July 9. The lead-covered cables will be found on the poles, soil, and water potentially risking the health of employees and communities around it, the article said.
“We’re unable to specifically quantify financial risks (if anything material) for wireline Telcos from the concerns raised by WSJ articles,” said Citi’s Rollins. “We remain concerned for further near-term downside risk and look at the uncertainty as an overhang in the interim.”
AT&T didn’t immediately reply to a request for comment from Barron’s. In response to WSJ, the corporate said it doesn’t imagine its cables are a public-health hazard or a major contributor to environmental lead considering other sources of lead closer to people’s homes.
AT&T told Citi that lead inside their network is a small percentage of the overall infrastructure, based on the note. Citi analysts also downgraded
Frontier Communications
(FYBR), a Barron’s stock pick this past weekend, and
Telephone & Data Systems
(TDS) to Neutral/High Risk from Buy rankings in the identical note.
Citi’s downgrade comes after J.P. Morgan analyst Philip Cusick cut his rating on AT&T’s stock on Friday. Cusick lowered his rating to Neutral from Obese citing potential liability for lead-sheathed cables as one in all his reasons. He cut his price goal to $17 from $22.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com