On Wednesday, Scotiabank updated its outlook on Verizon Communications (NYSE:VZ), increasing the stock's price target to $46.50 from the previous target of $45.50. The firm retained a Sector Perform rating on the shares, indicating a neutral perspective on the company's stock performance in the near term.
The analyst at Scotiabank believes that Verizon's financial results will enhance throughout the remainder of the year, driven by positive wireless subscriber trends and pricing strategies. In addition, a projected smaller decline in the business segment is expected to contribute to the company's financial health.
Verizon has indicated that its recent changes in the consumer wireless market approach are yielding results, with expectations for continued year-over-year improvements. Although a decrease in consumer postpaid phone subscribers is still anticipated, with a forecast of -38K, it marks a significant improvement compared to the -136K from the previous year. The analyst predicts a turnaround to positive postpaid phone subscriber growth in the third and fourth quarters.
The reduction of customer turnover, or churn, is deemed crucial for Verizon to shift its subscriber growth to a positive trajectory decisively. Despite recent plan price increases, the impact on churn is expected to be minimal, as competitors have also raised prices around the same period.
In other recent news, Verizon Communications has been the subject of several major developments. Goldman Sachs (NYSE:GS) initiated coverage on Verizon, highlighting the company's potential growth from the deployment of fixed wireless across consumer and business sectors. The firm also indicated a positive outlook for Verizon's revenue and EBITDA growth, as well as potential for increased capital returns and buybacks.
In board appointments, Verizon announced the addition of Caroline A. Litchfield, the current Executive Vice President and Chief Financial Officer of Merck & Co., Inc., effective from October 1, 2024. Meanwhile, the Federal Communications Commission Chair, Jessica Rosenworcel, has requested major telecom companies, including Verizon, to disclose their strategies against fraudulent AI-generated political robocalls.
Telecommunications industry groups, including Verizon, are legally challenging the reinstatement of net neutrality rules by the Biden administration. In analyst notes, Citi has maintained its Buy rating on Verizon, subtly adjusting its forecast for Verizon's SecondNumber feature. Furthermore, Verizon has included Comcast Corporation (NASDAQ:CMCSA)'s Peacock service in its streaming subscription hub, +play, and offered a discounted subscription to YouTube Premium for its myPlan subscribers. These are the recent developments for Verizon Communications.
InvestingPro Insights
According to the latest data from InvestingPro, Verizon Communications (NYSE:VZ) maintains a solid position with a market capitalization of $173.84 billion and a price-to-earnings (P/E) ratio of 15.47, which further adjusts to a lower 10.02 when looking at the last twelve months as of Q1 2024. This adjusted P/E ratio suggests a more favorable valuation compared to the standard P/E metric. Additionally, Verizon's consistent dividend payments, with a current dividend yield of 6.55%, underscore its commitment to returning value to shareholders—a fact that is further highlighted by the company's track record of raising its dividend for 19 consecutive years.
InvestingPro Tips reveal that Verizon is a prominent player in the Diversified Telecommunication Services industry and is known for its low price volatility. Moreover, the company is trading near its 52-week high, with a price that is 95.12% of this peak, reflecting a potentially strong confidence among investors. For those interested in deeper analysis and additional insights, InvestingPro offers more tips on Verizon, which could be accessed with the usage of coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 11 additional InvestingPro Tips available, investors can gain a comprehensive understanding of Verizon's financial health and market position.
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