The investment firm is bullish on the Dallas company's next 12 months despite a large C-band bill.
"We believe the situation improves for AT&T over the next 12 months, offering a solid total return story," Raymond James analyst Frank Louthan said.
"AT&T is expected to generate "more than enough free cash flow to cover its upcoming C-Band commitments; 2) keep leverage in check; and 3) maintain the dividend at or above the current level." C-Band is spectrum to be used for 5G applications.
The firm also notes that balance sheet concerns are "overblown" since AT&T currently has "~2.7x leverage, roughly a 1/2 turn above its historical average."
Raymond James had downgraded AT&T at the start of the pandemic based on concern about the telecom conglomerate's WarnerMedia entertainment unit, which is headlined by its Turner and HBO networks.
But most of the bad news from that period is now reflected in the stock, which has dropped nearly 20% since the beginning of March, Raymond James said.
"We believe there is far more demand for [direct-to-consumer] theatrical releases than Hollywood insiders want to believe, and unless the world reverts to box-office in person attendance that rivals 2019 levels, the biggest mistake will be not charging enough for in-home viewing," Louthan said.
"With HBO Max finally on the dominant streaming hardware platforms, we believe the streaming service will begin to see significant subscriber gains, and the stock should react well to these gains."
The stock at last check rose 1.8% to $29.27.