Market Preview: A Messy Pullback

As for Wednesday's scheduled news, AT&T Corp. (T) is slated to report its third-quarter results before the opening bell and the average estimate of analysts polled by Thomson Reuters is for earnings of 60 cents a share in the September-ended period on revenue of $31.58 billion.

Shares of the communications giant are up more than 15% so far in 2012, despite earnings and revenue remaining relatively flat throughout the year. The company enjoyed a record sales day in the wake of the release of the iPhone 5 in mid-September, and the stock hit a 52-week high of $38.58 shortly after on Sept. 21. The trend in margins, however, has become a concern for the big wireless providers, so investors will be anxious for color on how AT&T fared ahead of the iPhone's arrival as well as what its expectations are for the remainder of the year.

The sell side is pretty down on AT&T ahead of the release with 26 of the 39 analysts covering the stock at either hold (24) or underperform (2). The 12-month median price target sits at $36.75.

Deutsche Bank, which has a hold rating and $34 price target on the stock, is in line with the consensus profit view.

"We are focused on 4 issues: (1) visibility on 4Q wireless margins based on expected smartphone sales (est 17.1M YTD vs. '12 guidance of 25M); (2) T's outlook for ARPU growth based on shared data plan adoption; (3) visibility on wireline enterprise revenue growth; and (4) uses of cash in coming quarters, including spectrum purchases, buybacks and capex," the firm said in its preview of the results on Tuesday. "We believe T's 5% dividend yield provides downside support, but we maintain Hold as we see limited upside potential to EPS estimates or P/E near term."

Check out TheStreet's quote page for AT&T for year-to-date share performance, analyst ratings, earnings estimates and much more.

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