We Continue To Prefer Verizon Amongst Large-Cap Telcos, Says RBC Capital


In a research report issued this morning, RBC Capital analyst Jonathan Atkin reiterated an Outperform rating on Verizon Communications (NYSE:VZ), but slightly reduced his price target to $51 (from $54) to reflect the stronger near-term gross additions, higher postpaid upgrade rates, higher churn, and other competitive impacts.

Atkin said, “We expect the competitive environment could range between unchanged (on the optimistic side) to more aggressive. Sprint is having early success attracting VZ customers with its “Cut Your Bill in Half” promotion and could become more aggressive still in 2015. We believe recent porting trends have favored Sprint. VZ management expects the competitive headwinds will results in an uptick in churn in 4Q14.”

The analyst added, “Verizon Wireless’ superior network quality is a key factor that drives its industry-leading subscriber growth and churn metrics. Despite the faster growth, the company’s low churn contributes to industry-leading margins that we believe will continue to surpass peers as the company typically provides fewer discounts and promotions vs. peers. We believe VZ’s network quality edge can be maintained as it fills out its largely unused AWS spectrum during 2014 following network and device upgrades.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jonathan Atkin has a total average return of 8.8% and a 68.9% success rate. Atkin has an 1.5% average return when recommending VZ, and is ranked #650 out of 3426 analysts.

 

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