Apple, AT&T ring in 2021 as analysts' top picks after dark week in DC

Amid a particularly tumultuous week in Washington, major tech and telecom stocks moved in different directions as analysts announced their top company picks for 2021.

The broader market surged during the first full trading week of 2021, seemingly unmoved by riots at the U.S. Capitol on Jan. 6 by supporters of President Donald Trump. The riots began shortly after Congress had convened to certify President-elect Joe Biden's Electoral College victory and after Trump exhorted rallygoers to march to Congress.

Trump took to social media shortly after the riots ensued, reiterating in a video his view that the 2020 presidential election results had been "stolen." Facebook Inc. and Twitter Inc. swiftly removed the video, with Facebook indefinitely blocking Trump from posting content on its platform and Twitter placing a temporary hold on the president's account.

Facebook CEO Mark Zuckerberg in a Jan. 6 blog post said the ban on Trump would last at least through Biden's inauguration on Jan. 20, noting that the risks of Trump continuing to use the service "are simply too great." Meanwhile, Twitter on Jan. 6 suspended Trump's account for 12 hours, but it has since allowed him to post on the platform. However, Twitter noted it could enact a permanent suspension if he continued to violate its policies against misinformation.

Facebook shares closed Jan. 7 at $268.74, trading down 1.62% for the week-to-date; Twitter shares closed Jan. 7 down 3.36% for the week-to-date.

Elsewhere, ViacomCBS Inc.'s stock got a boost this week as Wall Street cheered the company's decision to expand its content distribution deal with Hulu LLC.

Viacom on Jan. 4 announced its new distribution agreement with Hulu, a subscription video-on-demand service. As part of the deal, Viacom will offer 14 additional ViacomCBS cable networks on Hulu's live TV offering, including Comedy Central (US) and Nickelodeon/Nick At Nite (US). Hulu + Live TV costs $64.99 per month and provides subscribers with access to over 65 live TV channels, including news, sports and entertainment.

Financial terms of the agreement were not disclosed. KeyBanc Capital Markets analyst Brandon Nispel considers the partnership a positive for Viacom stock, estimating in a report this week that the deal should add about $186 million in additional annual revenue in 2021.

Viacom shares closed Jan. 7 trading up 7.68% from its Dec. 31, 2020, close at $40.12 apiece.

In the telecom space, AT&T Inc. also rose this week as one analyst at Raymond James believes there is still much room for upside to the stock in 2021.

Raymond James analyst Frank Louthan upgraded AT&T stock to "outperform" from "market perform," noting in a report that the "shares are heavily shorted," which he considers to be "a recipe for upside." Louthan had earlier downgraded the stock amid pandemic-driven concerns but now says AT&T's best days are ahead.

"Large-cap value names are hard to come by, and we think investors who can wait a few months for a mean reversion while locking in a 7% yield should be rewarded for buying AT&T at current levels," he wrote in a note obtained by MarketWatch.

AT&T closed Jan. 7 up 4% for the week, at $29.91 per share.

For his part, Timothy Lesko, a partner and portfolio manager at Granite Investment Advisors, said the market's somewhat contradictory response to this week's events makes sense, noting that investors are instead holding a long-term view of the economy and do not expect the new Congress to pass any sweeping legislation initially.

"The financial markets are looking at June, July and August now, not at January, February, March," he said in an interview. "I think that any significant economic change is not necessarily in the offing this month, next month or the month after that."

Finally, Apple Inc. shares dipped slightly, even as Loup Ventures managing partner Gene Munster predicted the company will be the top-performing stock this year in the so-called FAANG grouping, which includes Facebook, Apple, Amazon.com Inc., Netflix Inc. and Alphabet Inc.'s Google LLC.

The analyst cited strong continued demand for Apple's iPad and Mac businesses as more people are working and learning from home amid the pandemic and growing enthusiasm for the 5G iPhone, which he expects to spark a two-to-three-year iPhone upgrade cycle.

Apple closed Jan. 7 trading down 1.33% for the week-to-date.