NEW YORK (TheStreet) -- Shares of AT&T Inc  (T) - Get AT&T Inc. Report were rising, up 0.8% to $35.31 in early market trading Thursday after the company had its rating raised to "overweight" from "neutral" by analysts at JPMorgan Chase this morning.

The firm also increased its price target to $40 from $35, as AT&T wraps up its $49 billion buyout of DirecTV (DTV) .

JPMorgan analysts believe synergies from the acquisition should drive higher free cash flow, and expects the deal to close on June 30.

The firm coupled the higher rating with a downgrade on Verizon Communications (VZ) - Get Verizon Communications Inc. Report to "neutral" from "overweight" this morning.

TheStreet Recommends

Dallas, Texas-based AT&T is a provider of telecommunications company, offering services including wireless communications, local exchange, long-distance, data/broadband and Internet, video, telecommunications equipment, managed networking, wholesale and directory advertising, and publishing.

Separately, TheStreet Ratings team rates AT&T INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AT&T INC (T) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • T's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 0.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for AT&T INC is rather high; currently it is at 55.24%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.82% trails the industry average.
  • AT&T INC's earnings per share declined by 12.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AT&T INC reported lower earnings of $1.19 versus $3.41 in the prior year. This year, the market expects an improvement in earnings ($2.53 versus $1.19).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Diversified Telecommunication Services industry average. The net income has decreased by 12.4% when compared to the same quarter one year ago, dropping from $3,652.00 million to $3,200.00 million.
  • Even though the current debt-to-equity ratio is 1.12, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.48 is very low and demonstrates very weak liquidity.
  • You can view the full analysis from the report here: T Ratings Report