JPMorgan Cuts Verizon (VZ) to Neutral as Industry Growth Slows, Capacity Increases

Shares of Verizon (NYSE: VZ) are down about 0.5% in pre-market Wednesday after JPMorgan analyst Philip Cusick downgraded to Neutral from Overweight.

A new price target is $56.00 per share from the prior $62.00 to reflect concerns related to the subscriber growth outlook for postpaid phones in 2022 and the entire industry. The analyst expects Verizon to post subscriber losses beyond Q1.

“Competition remains high in wireless and likely gets more difficult as new supply comes on from C-band, T-Mobile’s 2.5 GHz spectrum, Dish’s eventual launch, and cable’s small cell efforts. Beyond fixed wireless broadband, this additional capacity could incent carriers to chase incremental subscribers or usage, resulting in even less competitive discipline than we have seen in recent times,” Cusick wrote in a client note.

The analyst also sees “limited growth upside for Verizon in wireless, no near-term buyback given the capex spend for C-Band and potentially a headwind from rising rates.”

Cusick’s move comes after the company yesterday reported Q4 EPS of $1.31, $0.02 better than the analyst estimate of $1.29. Revenue for the quarter came in at $34.1 billion versus the consensus estimate of $33.89 billion.

Verizon also said it expects FY2022 EPS of $5.40-$5.55, versus the consensus of $5.39.

Verizon stock price closed at $52.90 yesterday.

By Senad Karaahmetovic | [email protected]

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