On Wednesday, Citi upgraded its price target for shares of Verizon Communications (NYSE:VZ) to $49.00, up from the previous $47.00, while keeping a Buy rating on the stock. The firm anticipates Verizon to present robust third-quarter financial results and key performance indicators (KPIs), indicating consistent progress toward its annual targets.
The telecommunications giant is expected to report an uptick in postpaid phone volumes, revising its outlook to an increase of approximately 230,000 subscribers, which includes 65,000 from its SecondNumber service. Moreover, Verizon is projected to achieve a year-over-year service revenue growth of 1.8%, which is slightly above the consensus estimate, and an EBITDA (earnings before interest, taxes, depreciation, and amortization) growth of 1.5% year-over-year, also surpassing consensus expectations.
Citi's analysis includes minor adjustments to Verizon’s model, taking into account a reduced consumer upgrade rate and previously disclosed charges related to workforce reductions. As the market's attention begins to turn toward projections for 2025, Citi suggests that Verizon may outperform consensus estimates on service revenue and EBITDA growth. This optimism is partly due to the company's continued efforts to enhance average revenue per user (ARPU) monetization, with recent changes to autopay services being a notable example.
In conclusion, Citi maintains a positive stance on Verizon's stock, citing potential for the company to surpass market expectations in terms of service revenue and EBITDA growth. The firm's revised price target of $49 per share reflects this confidence in Verizon's financial trajectory and strategic initiatives.
In other recent news, Verizon Communications has seen significant changes in its financial landscape. The company's Q2 2024 financial performance showed a 3.5% year-over-year increase in wireless service revenue, contributing to a total consolidated revenue of $32.8 billion.
The adjusted EBITDA for the same quarter rose to $12.3 billion, marking a 2.8% increase from the previous year. RBC Capital has raised its price target for Verizon's stock, citing anticipated cost savings from the company's employee separation program and a decrease in handset upgrades as key drivers behind the improved EBITDA outlook.
In addition, Verizon announced plans for a merger with Frontier Communications (OTC:FTRCQ) Parent, Inc., subject to regulatory and shareholder approvals. Goldman Sachs maintained its Buy rating on the stock, showing confidence in the proposed Frontier transaction. However, KeyBanc reduced its price target for Verizon while maintaining an Overweight rating, expressing concerns about potential dilution of free cash flow and earnings per share due to the Frontier acquisition.
InvestingPro Insights
As Verizon Communications (NYSE:VZ) gears up to release its third-quarter financial results, investors and analysts are closely monitoring the company's performance. According to recent data from InvestingPro, Verizon maintains a market capitalization of $187.79 billion, underscoring its significant presence in the telecommunications industry. The company's P/E ratio stands at 16.68, which aligns with the industry average, indicating a potentially fair valuation of the company's earnings.
InvestingPro Tips reveal that Verizon has a longstanding history of rewarding shareholders, having raised its dividend for 20 consecutive years and maintained dividend payments for 41 consecutive years. This consistency is a testament to Verizon's financial stability and commitment to returning value to its investors. Moreover, with a dividend yield of 6.07%, Verizon presents an attractive option for income-seeking shareholders.
Analysts remain optimistic about Verizon's profitability, with predictions that the company will remain profitable this year and has been profitable over the last twelve months. This is further reflected in the company's solid gross profit margin of 59.85%. For investors seeking additional insights, InvestingPro offers a plethora of tips, with 6 more related tips available that can guide investment decisions in the telecommunications sector.
For those interested in a deeper analysis, more comprehensive metrics and tips can be found on InvestingPro's platform, specifically tailored for Verizon at https://www.investing.com/pro/VZ.
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