The 2013 All-America Research Team: Telecom Services, No. 2: Simon Flannery

After a two-year run at No. 3, Morgan Stanley’s Simon Flannery advances to second place. Tracking 25 names, a net gain of two over the past year as a result of IPOs and consolidation, Flannery expects telecommunications services providers to perform in line with the broad market — though he does maintain overweight ratings in select subsectors. For example, among tower companies, he prefers Boston’s American Tower Corp., Crown Castle International Corp. of Houston and Boca Raton, Florida–based SBA Communications Corp. In addition, BCE and Rogers Communications are two Canadian telecom favorites. On the other hand, Flannery downgraded AT&T from overweight to equal weight in April, at $38.51. The Dallas-based provider’s shares were then up 18.6 percent for the year and ahead of the sector by 3 percentage points. The analyst cited valuation concerns, management’s recently signaled trimming of its share-repurchase program and “incremental top-line pressure in wireless and wireline, reflecting macro, competitive and market maturity factors, which could continue.” From Flannery’s downgrade through August, the stock declined 12.2 percent, to $33.83, in line with the sector’s loss. — Pam Baker