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Quarter-End Insights

Communication Services: Sector Continues to Outperform

We see little strategic reason for AT&T to combine wireless and media businesses.

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The Morningstar U.S. Communications Services Index (Exhibit 1) continues to handily outperform the broader market, gaining nearly 9% over the past three months. Traditional phone companies AT&T (T) and Verizon (VZ), along with cable giant Comcast (CMCSA), dominate the index and largely dictate its direction. All three stocks have performed well recently, but AT&T has been the standout. Market sentiment around AT&T has gradually improved during 2019, helped by falling interest rates, but the shares received an additional lift on the involvement of activist hedge fund Elliott Management.

AT&T, Comcast, and American Tower have driven telecom outperformance. - source: Morningstar

Michael Hodel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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