Raymond James Upgrades Verizon Communications (VZ) to Outperform; 'Defensive Characteristics'
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(Updated - March 16, 2020 7:42 AM EDT)
(updated to add analyst comments)
Raymond James analyst Frank Louthan upgraded Verizon Communications (NYSE: VZ) from Market Perform to Outperform with a $58 price target, citing defensive characteristics, with steady FCF and more importantly lower leverage than AT&T.
The analyst commented, "We are upgrading our rating on shares of Verizon to Outperform from Market Perform. Our thesis on Verizon has been that while it has a less complicated business model, it had little upside to drive higher valuation or a meaningful catalyst. Given the change in sentiment and market conditions, this no longer seems to be the appropriate way to look at the name. We believe the name has defensive characteristics, with steady FCF and more importantly lower leverage than AT&T have likely all contributed to its recent out performance, down only 7.0% since 2/19/20 to AT&T's decline of 10.3%. As we discuss above, our view on the recession and the increased scrutiny on the definition of "leverage" we now believe the lack of a catalyst and EPS growth is less relevant. Investors will be attracted to the yield, and the simpler business model vs. AT&T, while giving fewer things to be concerned over, and less metrics to judge. AT&T will still have to deal with video sub trends, media trends, and the potential recessionary impact on various business lines that Verizon lacks."
Shares of Verizon Communications closed at $50.30 yesterday.
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