AT&T Stock Could Fall from Rising Capital Expenses

Trefis members have created forecasts for two key drivers of AT&T ( T) shares over the last week: Mobile CapEx (as a percentage of mobile gross profits) and mobile plans and phones gross profit margin.

Their forecasts suggest that the Mobile CapEx trends higher than the Trefis forecast, while the Mobile Plans & Phones Gross Profit Margin is in line with the Trefis forecast. These projections suggest a combined downside of around 6% for AT&T's stock.

Mobile Plans & Phones is the most valuable division, constituting 43% of the $38 Trefis price estimate for AT&T's stock . In comparison, Internet & TV and Phone Landlines account for around 19% and 15%, respectively, of the stock. AT&T primarily competes with Sprint Nextel ( S) and Verizon ( VZ) in the mobile phones business.

Given that mobile plans and phones form the core business, AT&T's stock is quite sensitive to Mobile CapEx as a percentage of Mobile Gross Profits and Mobile Plans & Phones Gross Profit Margin.

The average of forecasts for Mobile CapEx as a percentage of Mobile Gross Profits created by Trefis members indicated a projected increase from about 22% in 2010 to nearly 26% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from about 20% in 2010 to 22% by the end of the Trefis forecast period.

The member estimates imply a downside of 7% to the Trefis price estimate for AT&T's stock. In the past, Mobile CapEx as a percentage of Mobile Gross Profits has increased from 15% in 2007 to 18% in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of AT&T's stock to Mobile CapEx as a percentage of Mobile Gross Profits.

Our complete analysis for Mobile CapEx as a percent of Mobile Gross Profits is here .

The average of forecasts for Mobile Plans & Phones Gross Profit Margin created by Trefis members indicated a projected decrease from about 59% in 2010 to about 53% by the end of the Trefis forecast period, mostly in-line with the Trefis forecast.

The member estimates imply an upside of 1% to the Trefis price estimate for AT&T's stock. In the past, Mobile Plans & Phones Gross Profit Margin has decreased from 70% in 2003 to about 60% in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of AT&T's stock to Mobile Plans & Phones Gross Profit Margin.

Our complete analysis for AT&T's stock is here .

Trefis is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the U.S.

More from Technology

Listen: Will Smart Technologies Woo Millennials Back to Motorcycle Riding?

Listen: Will Smart Technologies Woo Millennials Back to Motorcycle Riding?

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Tesla's $78,000 Model 3 Is a Bargain. Here's Why

Tesla's $78,000 Model 3 Is a Bargain. Here's Why

Tesla Model 3 Delivery Time Falls, but Will It Help the Stock?

Tesla Model 3 Delivery Time Falls, but Will It Help the Stock?

Baidu Stock Plummets After COO Qi Lu Resignation

Baidu Stock Plummets After COO Qi Lu Resignation