NEW YORK (TheStreet) -- AT&T's (T - Get Report) stock is expected to rise as investors await more details about the company's strategy following its merger with DirecTV (DTV - Get Report) and expansion into Latin America.
AT&T will hold an analyst day on Aug. 12 in Dallas to discuss its strategy after completing the acquisitions of DirecTV and companies in Mexico, according to sources familiar with the matter.
In the invitation sent to analysts early this week, Randall Stephenson, CEO of AT&T, wrote "Our DIRECTV and Mexican wireless deals are done and AT&T is now a very different company. We have a unique set of assets and are poised to lead in a world defined by video, mobility and high-speed connectivity. Please join me to hear our plans for executing that vision."
A spokesperson for AT&T declined to confirm the date of Analyst Day, but the Texas-based telecom promised analysts to hold the event soon after the completion of its merger with DirecTV.
U-verse is probably at the heart of AT&T's mobile video strategy, speculated a banker. U-verse, similar to Verizon's FiOS, is a high-speed broadband network over which AT&T can deliver mobile video because it connects devices to the Internet, said the banker. DirecTV, as a satellite TV service, partnered with companies like AT&T because it lacked hard-wired Internet connections.
As customers move toward Internet video services like Netflix (NFLX - Get Report) and away from triple-play bundles, DirecTV's contribution to AT&T's over-the-top strategy could be its large base of video customers, which would help AT&T negotiate lower costs from entertainment providers, the banker said.
Even if DirecTV is not the central piece in AT&T's Internet video strategy, it brings the phone company expansion opportunities in Latin America, where DirecTV is the largest pay-TV provider. AT&T added to its Latin American presence by buying Iusacell and Nextel Mexico after announcing the DirecTV deal.
"We like both AT&T's DirecTV and Mexican expansion strategies, and we think they lead to a positive perception of the stock," said Colby Synesael, managing director at Cowen & Co. He forecast AT&T's stock price could increase by a few percentage points in anticipation of Analyst Day or in the following weeks. AT&T tends to be a slow moving stock, he noted. But it could inch toward Cowen's target of $40 per share by Analyst Day or shortly thereafter, depending on AT&T's comments. AT&T closed on Thursday at $34.80, so a rise to $40 would mean a 15% increase.
Paul de Sa, analyst at Bernstein Research, also thought investors could see AT&T's stock rise toward his price target of $38 per share, as did John Hodulik, analyst at UBS, who has a price target of $42 per share on AT&T.
Cowen and UBS have buy ratings on AT&T. Bernstein has a market perform.
Synesael said he expects AT&T to discuss revenue growth, profitability and free cash flow in light of the recent acquisitions. He also expects AT&T to explain how much it will save each year as it progresses to $2.5 billion in synergies by 2018.
Since U.S. investors know little about Latin America, said Synesael, AT&T could describe basic information, such as who the typical customer is in that region, who its wireless competitors are, what data traffic is like, and what AT&T's position is in the market.
Other topics could include what will become of DirecTV's brand, and how AT&T will handle U-verse video now that it also sells satellite TV, said de Sa. AT&T could address how its Internet video will evolve, and if the company will sell DirecTV in stores or customer support centers, said Hodulik.
AT&T could also provide details about capital investments now that it's a satellite television company and how its services will differ from competitors, said Timothy Horan, analyst at Oppenheimer.
A spokesperson for AT&T declined comment.
On Friday, the Federal Communications Commission approved of AT&T's merger with DirecTV, and the company immediately announced the finalization of the DirecTV deal.