Oppenheimer Maintains Outperform On Verizon Communications Following Quarter Results

In a research report issued to investors today, Oppenheimer analyst Timothy Horan maintained an Outperform rating on Verizon Communications (NYSE:VZ) with a $56 price target, as the company reported strong quarter of volume growth in 3Q; however, margins were pressured by lower than expected percentage of EDGE sales, so there was relatively less equipment revenue to offset subsidies, which were elevated this quarter from the strong smartphone and tablet sales.

Horan observed, “Some investors were concerned about the deceleration of service ARPA, but we estimate postpaid ARPA grew closer to 5% vs. reported 3.5%. We are raising volume forecasts but lowering EPS estimates given our expectations for heavy upgrade activity going into 4Q. We think the company can grow EPS at close to double digits and that its 2015E P/E multiple is inexpensive at 12.5x earnings.”

Bottom line, “We believe the company remains on track for double-digit earnings growth in 2014-15. We are maintaining our $56 PT and reiterate our Outperform rating. We continue to believe that the 4.5% dividend yield is attractive, and expect multiple expansion.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Timothy Horan has a total average return of 11.7% and a 54.2% success rate. Horan has a 18.9% average return when recommending VZ, and is ranked #641 out of 3337 analysts.

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