AT&T’s beleaguered stock has gotten an upgrade from sell to neutral from MoffettNathanson analyst Craig Moffett. The Wall Street veteran’s reasoning, though, offers little reassurance to investors who may be worried about the company’s massive debt and strategic direction.

The company’s shares “have fallen so far and so fast, with such a dramatic divergence from Verizon, that it simply no longer warrants maintaining a sell rating,” Moffett writes. “We are still bearish about AT&T’s strategy, and about their longer-term prospects, particularly in the event of a recession. But there’s a price for every asset… and the current price seems like a fair one.”

AT&T stock started today’s session at $29.66, within a dollar of its 52-week low and down more than 20% since the start of 2018.

AT&T

Moffett downgraded the stock to sell on June 13, the day after U.S. District Court Judge Richard J. Leon allowed the AT&T-Time Warner deal to proceed. Leon rejected the contention of Department of Justice antitrust regulators that the merger was anti-competitive and anti-consumer. The DOJ has appealed the decision and an appellate panel of judges will hear oral arguments next week.

While AT&T’s stock is now often compared with those of major media companies like Comcast and Disney, Moffett focused his analysis on the telecom sector.

“The divergence between AT&T and Verizon over the past seven months has been nothing short of breathtaking,” he wrote. Verizon, which has changed CEOs and abandoned plans to be a player in video content, has seen its shares gain 11% year to date, following an upward trajectory over the past six months.

Traditionally, AT&T had been the “quintessential” defensive stock, Moffett observes. Investors could count on it for decades to help them weather market turbulence.

That was when it was a telephone company, however. AT&T’s investments in satellite provider DirecTV and entertainment giant Time Warner in recent years have sent its debt load skyrocketing. Including items like operating leases for cell towers and unfunded pension and post-retirement benefit plans, the company carries some $250 billion in debt, Moffett estimates.

With so much debt, the analyst argues, “Management has no other choice but to prioritize debt retirement” over growth initiatives or reinforcing the company’s dividend yield.

Moffett throws cold water on the company’s claim that it will break even in its “entertainment” unit — the part of the company that houses DirecTV and the U-verse cable systems. But he said negative factors there, primarily ongoing losses of traditional pay-TV subscribers, have been priced into the stock.