AT&T (NYSE:T) experienced a rise of over 1% intra-day today following an upgrade by Oppenheimer from Perform to Outperform, with a new price target of $21.

The analysts noted that AT&T had underperformed compared to the market and its industry peers in recent years, largely due to challenges faced during its transformation into a focused connectivity provider. However, they believe these difficulties are now in the past, and the stock is poised to benefit from several positive developments.

Key among these tailwinds are significant enhancements in network capacity and coverage in both wireless and wireline segments, leading to growth in Average Revenue Per User (ARPU). Improved trends in broadband subscribers and revenue, bolstered by fiber builds and Fixed Wireless, were also highlighted.

In addition, other factors contributing to AT&T's positive outlook include the potential merger of DirecTV with Dish, a concentrated effort on reducing expenses to boost free cash flow and strengthen the balance sheet, and an attractive valuation characterized by 15% free cash flow (FCF) and a 7% dividend yield.