Not very long ago, Verizon Communications Inc. was garnering accolades for its straightforward approach, while AT&T Inc (AT&T stock) was raising eyebrows with its unwieldy combination of cellular, satellite, and media operations.

Things are not quite the same as they were in the past. AT&T (NYSE:T) has recently divested itself of several non-core businesses in an effort to refocus its operations on the telecoms industry. In the meanwhile, Verizon maintains its uncomplicated business composition; yet, the company’s recent performance has caused some investors to feel uneasy.

The status quo at Raymond James appeared to be shifting, as evidenced by a recent upgrade.

AT&T Stock and Recommendation From An Analyst

Raymond James analyst Frank Louthan IV stated in a note to clients that he had upgraded his recommendation on AT&T stock from outperform to strong buy because he believed that the company’s story was becoming simpler. This would further interest investors. “In addition, we feel that companies with basic recurring revenue names that have excellent dividends, like AT&T, are better performers in a challenging situation. And with macro difficulties hurting the market, we believe that the firm can outperform.”

According to what he said, telecommunications companies “tend to perform worse than predicted in an economic downturn,” but he believes that the majority of that risk is already baked into the price of AT&T’s shares. Even though the company has “a far simpler story today with less cyclical business and better earnings growth than peers,” AT&T shares are trading below their average price-to-earnings multiples for the past two, five, and ten years. This is the case despite the fact that the company has “a far simpler story today.”

“While we continue to caution investors that telecom stocks may not be the most defensive, the businesses themselves are absolutely defensive, and we do not anticipate any weakening in the fundamentals,” concluded Louthan.

He is of the opinion that AT&T has a more favorable prognosis than Verizon in terms of the increase of cellular subscribers, growth in profits per share, and expansion of margins.

According to what Louthan noted, “So in a very strong competitive climate, both AT&T and Verizon are actively promoting,” yet AT&T is already experiencing success on those three criteria. As a result of this, he continued, “as a result, we anticipate AT&T can continue to beat Verizon over the next few quarters.”

During trading on Monday morning, AT&T shares increased by 4.3% and are presently the second-best performer in the S&P 500 SPX, which increased by 1.05%. AT&T (NYSE:T) led the way for all of the gainers on the S&P 500 at various periods earlier in the session.

As a result of the earnings report that was released on Thursday, the shares have gained some momentum. The stock of AT&T had its best week since the year 2000 last week.

Although Verizon’s share price has dropped by more than 30%, the overall fall for the company’s stock is just approximately 4% so far this year.

Featured Image-  Megapixl @ Luckydoor

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