AT&T (T) delivered strong, cost-efficient wireless subscriber growth in Q2, reinforcing its investment thesis, RBC Capital Markets said.

The brokerage said in a Wednesday note that the company's bundling strategy continues to gain traction. It expects the accelerated wind-down of AT&T's legacy network to drive meaningful free cash flow expansion through 2028 and beyond.

RBC noted that AT&T reaffirmed its 2026 guidance for revenue, EBITDA, capital expenditures and free cash flow. The company's management also increased its share repurchase target for 2026 to $10 billion from $8 billion, saying the stock remains undervalued.

The firm said it does not expect AT&T to pursue a mobile virtual network operator agreement with Starlink. The company continues to explore partnerships with Amazon (AMZN) LEO and AST SpaceMobile (ASTS) to extend coverage beyond its existing network.

The investment firm raised its EBITDA and free cash flow estimates for 2026 and 2027.

RBC has an outperform rating on AT&T with a price target of $27.

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