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Analysts give thumbs-up to AT&T Wireless

As Wall Street sizes up the potential after-market performance of the tracking stock, more than a dozen analysts initiate coverage with target prices in the high $30 range.

As Wall Street sizes up the potential after-market performance of AT&T Wireless Group, more than a dozen analysts initiated coverage today with target prices in the high $30 range.

AT&T Wireless, which launched its initial public offering under the ticker symbol "AWE" last week, has received 12-month price targets from $38 to $47 a share, said Joe Cooper, a research analyst with First Call.

The unit, which priced at $29.50 and closed up at $31.56 on its first day, closed at $31.44 today.

"A $10 increase in 12 months may not seem like a lot. But you're looking at a 30 percent potential appreciation in that time, and when compared with the markets' expected appreciation of 8 to 10 percent, it's pretty good," Cooper said.

While some Internet IPOs received price targets in triple digits when the market was roaring last year, the sizes of the offerings and the companies' profiles can effect those targets, he said.

AT&T Wireless, a tracking stock for telecom giant AT&T, floated an unusually large offering of 360 million shares.

Eight analysts initiated coverage of AT&T Wireless with "strong buys" and six with "buys."

Thomas Lee, an analyst with Chase H&Q, was among the analysts to kick off coverage with a "buy."

"It represents an exceptional combination of a high-quality, well-managed company operating as a dominant player in a fast-growing industry," Lee stated in a report.

But some analysts questioned the company's role in the changing landscape.

AT&T Wireless was see story: Tables turning for old-world telecoms?the undisputed leader in the U.S. mobile phone market just six months ago. But the company has been outpaced by two new joint ventures that will have more subscribers and that hold stronger bottom lines. Its profit margins also are lower than some of its competitors.

Nonetheless, Lee noted the strong fundamentals of the tracking stock.

"AWE--with its national footprint, strong brand and distribution, and established far-reaching organization and deep management--has managed to capture a disproportionate share of the lucrative enterprise and heavy-user customers," he said.

He added that the company is trading at a discount to its competitors including VoiceStream, Sprint PCS and Nextel. AT&T Wireless is trading at 6.4 times 2000 revenues, while its competitors have a range of 10.6 to 16.7 times revenues.