AT&T's merger with Time Warner, combined with better-than-expected wireless business trends and a lower corporate tax rate, presents a compelling opportunity for investors, according to Bank of America Merrill Lynch.  

Analysts at the brokerage upgraded shares of the telecommunications giant to buy from neutral on Monday, advising clients to pick up the "new and improved AT&T" at record low price to earnings levels.  

"AT&T is fundamentally sound, with a stable subscription-based business model," analyst David Barden said in a note. "Historically, the stock has outperformed during periods of M&A and wireless margin expansion fueled EPS growth and during periods of market uncertainty when AT&T's dividend yield and predictable business model are highly valued."  

Barden maintained his price target of $37 (representing 19 percent upside from Friday's close), but revised higher his 2018 revenue and earnings per shares forecasts to $170.57 billion and $3.56, up from his prior estimates of $153.86 billion and $3.36 respectively.

Shares of AT&T rose 1.1 percent in premarket trading following the optimistic Bank of America note.  

Much of the increase to the sales and earnings numbers, the analyst said, was a direct result of AT&T's merger with Time Warner, where investors can expect positive momentum in wireless, improved margin performance in entertainment and seasonal strength in Warner Media.