Argus Research analysts on Thursday upgraded AT&T (US:T) to buy from hold and provided a thorough look at recent company developments and their implications.

AT&T's Mobility business is driving overall results, validating management's strategic realignment away from entertainment assets and toward core wireless telephony and fiber broadband expansion, the firm said, adding that AT&T is rapidly building out its next-generation 5G wireless network as it successfully expands its subscriber base.

Argus maintained its 2022 adjusted EPS estimate at $2.51 and raised its 2023 forecast to $2.62.

"While telecoms are typically seen as safe havens in turbulent economic times, in AT&T's case, its focused debt reduction and refinancing in the last few years has made it more resilient in the current macro-environment," The firm said.

Its target price for AT&T is $24 a share.

"AT&T shares have begun to recover from the market pummeling the company took in response to the company's strategic about-face on entertainment, the (April 2022) WarnerMedia spinoff, and the dividend cut though valuation remains below historical norms and the peer average," the research firm wrote on Thursday.

It said AT&T wireless has gained fewer subscribers than industry leader T-Mobile (US:TMUS) but has outperformed Verizon (US:VZ), citing promotions over the last year.

Argus said that despite likely cutbacks on promotions, wireless remains the company's key revenue and profit driver. They also noted that AT&T's Chief Operating Officer Jeff McElfresh presented at a recent investor conference and said he expects AT&T to meet both its $24 billion capital spending goal and a $14 billion free cash flow for 2022 but did not comment on 2023's outlook for those data points. However, it expects network data traffic to increase fivefold from 2021 to 2025 as more people work remotely and the Internet of Things expands.

"AT&T's 2022 free cash flow guidance of $14 billion for 2022 is well below the $19.2 billion recorded in 2021. AT&T still expects free cash flow to rebound to $20 billion in 2023, though this could be a stretch given the macroeconomic environment and the company's continued high capital expenditures," Argus wrote.

The company did issue some 2023 outlooks and said it expects low single-digit 2023 revenue growth and adjusted share earnings per share of $2.42-$2.46 in 2022 and $2.50-$2.60 in 2023.

The research firm left its 2022 adjusted EPS estimate at $2.51 and boosted its 2023 forecast to $2.62.

Argus' 2022 estimate is above management's guidance of $2.42-$2.46, and it said its estimates imply our estimates imply average growth of 4% over the next two years, slightly ahead of its long term 3% EPS growth forecast.

In February 2022, the company announced that it would cut its dividend by 47% to $0.2775 or $1.11 annually, and did so in May this year.

ATT sports a forward yield of 5.8%, training rival Verizon's 7% yearly payout, Argus noted.