Verizon Communications (VZ) Results Look Solid, Investors Question Whether it Can Continue - Morgan Stanley
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Morgan Stanley analyst Simon Flannery reiterated an Equalweight rating and $60.00 price target on Verizon Communications (NYSE: VZ) after the company beat expectations and raised EPS guidance by over 20 cents at the mid-point (+4.4%). The company delivered 65bps of consumer postpaid phone churn this quarter down 12bps Q/Q despite the reopening of the economy. Regarding 5G, the buildout is on track, with C-Band clearing proceeding to plan and the company is confident it can deploy to 7-8k towers this year. Buybacks, however, were not reinitiated as management continues to focus on paying down debt.
The analyst stated "While some of the improvement reflected below the line items such as lower D&A related to the VMG sale and higher interest capitalization post C-Band, we were pleased to see the company return to positive postpaid phone adds this quarter. Adds modestly beat our expectations (where consensus was setting up higher heading into the quarter), while Verizon also raised wireless service revenue guidance. By pulling back on promotional activity, it appears that the company is also seeing solid momentum into 3Q21 as well". He went on to state "After a solid quarter from Verizon, the question is sustainability into 2H21 as stimulus benefits fade and competition increases. We are already seeing business wireless churn tick up as COVID demand unwinds from public sector customers."
Shares of Verizon Communications closed at $55.95 yesterday.
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