Verizon Communications (VZ) Not Immune to Competition, Says Credit Suisse; Analyst Trims Price Target

Credit Suisse maintained a Neutral rating on Verizon Communications (NYSE: VZ) and trimmed its price target to $51.00 (from $52.00). Yesterday it provided mixed guidance on Q4 trends. In the view of analyst Joseph Mastrogiovanni, the update shows competition is taking a toll.

"After the market close on December 8th, Verizon announced that it is seeing strong gross adds, partially offset by higher churn. The company expects pressure on wireless and consolidated margins due to strong sales of 4G smartphones and tablets, and increasing take rates of new discounted pricing plans," said Mastrogiovanni.

"We continue to believe that Verizon is more exposed to competition than investors expect. The company has been disciplined in its reaction to heavier competition and reluctant to re-price its subscriber base like AT&T. While this is good for ARPU, it can leave the subscriber base vulnerable to new promotions. Based on the company's press release, it saw strong traction with gross add share, but promotional activity combined with Verizon's targeted approach with its base resulted in higher churn. Overall, we believe the strength of new customer growth outweighed elevated churn and we're raising 4Q14 net adds to 1.9M; however, defending its share came at a cost, resulting in a reduction to our wireless margins and EPS," he added.

For an analyst ratings summary and ratings history on Verizon Communications click here. For more ratings news on Verizon Communications click here.

Shares of Verizon Communications closed at $48.90 yesterday.

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