Bernstein analyst Laurent Yoon no longer recommends any of the major telecommunications stocks as he warns of more volatility ahead

Questions about SpaceX's future plans could cloud over AT&T's stock, according to a Bernstein analyst.

AT&T was the last of the major telecommunications stocks that Bernstein analyst Laurent Yoon recommended to his clients, but now SpaceX has changed that calculus.

Yoon downgraded shares of AT&T (T) to market-perform from outperform late on Monday. With that, he now has a rating of market-perform - the rough equivalent of neutral - on the five big wireless and cable stocks when taking into account his existing views on Charter Communications $(CHTR)$, Comcast $(CMCSA)$, T-Mobile US $(TMUS)$ and Verizon Communications (VZ).

His downgrade of AT&T doesn't reflect a dramatically different view of the company's financial prospects in the short run. Rather, Yoon now expects a "prolonged investor debate" over the extent to which SpaceX (SPCX) represents a threat to AT&T and traditional internet providers more generally.

"In the current environment, we find it increasingly difficult to justify an outperform rating on incumbent operators, even at discounted prices, as volatility seem inevitable," Yoon wrote.

Shares of AT&T and its telecommunications peers sold off heavily on Friday after SpaceX announced the purchase of some low-band spectrum. That deal alone "isn't enough to alter the competitive landscape, at least not in the foreseeable future," Yoon noted. What's more important for the stock, however, is what SpaceX "could do next and what investors believe it ultimately intends to do."

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SpaceX, which already offers its Starlink residential satellite internet service, has made no secret of the fact that it has deeper ambitions in the world of telecommunications. Achieving those big goals will be no simple feat, since building out a network is expensive and requires more than just satellite capabilities. But the company is increasingly showing how serious it is about making inroads in this market.

"Whether that means acquiring additional spectrum, securing an MVNO partner, building a network, or simply making noise around either, the possibility of incremental competition in already saturated market with intensifying pricing pressure is likely to remain an overhang" over traditional telecommunications stocks, Yoon noted. A mobile-virtual-network-operator agreement, known in the industry as an MVNO deal, is when a company leverages an existing provider's network but puts its own brand on the service it markets to customers.

Yoon flagged "remarkable momentum" for SpaceX's current broadband offering, though he noted that Starlink isn't a "direct threat" to the fiber services offered by AT&T. He's more worried about the possibility for a "chain reaction, if Starlink pressures lower-end internet offerings and creates a ripple effect that eventually impacts higher-end types of internet service.

Internet offers from AT&T and others "already suggest competition is increasingly centered on value," Yoon continued. That could force providers to do a "delicate dance" as they try to strike the right balance between pricing and subscriber counts.

-Emily Bary