Verizon Communications Inc. (NYSE:VZ) shares have gained 4% in value in the last 24 hours, as anticipation settles into the Street ahead of this morning’s fourth quarter earnings showcase. Can the telecom giant come cylinders firing today, ready to impress investors?
Recovery buzz started to hit Verizon towards the end of 2017, a year that largely had not been all too kind to telecom players. July saw this telecom giant sink to a low of $41.90 and only in November did the stock start to gain back lost value. Now, Verizon has experienced a recovery of almost 14% compared to this time last year, and some murmurs on the Street say 2018 could be the follow-up comeback year Verizon needs after 2017.
Part of Verizon’s stumble comes from a cable business applying heat to shares, an impact of “cord-cutting,” or an unfavorable trend where customers have been opting to go for more attractively priced cable bundles coupled with over-the-top Internet streaming platforms over Verizon’s packages. Yet, the VZ team was not about to suffer the impact of rivalry without a fight, and part of the back-half of 2017’s comeback stems from a decision to match discounts seen from rivals.
Keep in mind, Verizon has its eyes on 5G, a ramp likely to hit this year and a savvy way to capture subs in the VZ camp again. True, rivals may offer better prices, but Verizon boasts 5G speed network quality that outpaces traditional wireless technology to the fast tune of 100x. Likewise, Internet of Things (IoT), poised as a connectivity powerhouse extending beyond the realm of smartphones or tablets is a business segment that realized a whopping $1 billion in revenue for the telecom giant in 2017.
Already in the third quarter of 2017, Verizon saw a jump of 603,000 wireless retail postpaid connections coupled with a low customer churn rate of 0.75%- meaning most subscribers are choosing to stay on for VZ’s services. This is the quarter that simultaneously saw Verizon score 30,000 postpaid accounts, an advantageous rise against the 107,000 decline seen in the third quarter of the year prior.
Today, consensus angles for $33.28 billion in revenues, which would mark a 3% year-over-year climb, along with $0.88 in non-GAAP EPS- translating to almost the worst per share earnings results VZ would see in the last 12 consecutive quarters- with just one performance even lower. Even so, bulls will argue that any results that lead to share pullbacks will point to an enticing opportunity to invest in the stock, especially with growth catalysts at play for the new year.
Worthy of note, operating metrics saw a meaningful boost between the second and third quarter of 2017 after Verizon unleashed once more its unlimited data plan. This contributed encouraging fuel to fire up more than 15% in the back-half of last year, impressive in a backdrop that was not ideal for the telecom playing field. It is safe to wager any rise compared to the performance of the fourth quarter of 2016 could satisfy shareholders. Regardless, the Street will be watching to see if subscribers are still willing to shell out a premium for what Verizon offers over the rest of its competitors: standout network performance as well as coverage.
TipRanks makes out a cautiously optimistic analyst consensus sizing up Verizon stock’s tech market prospects. Based on 9 analysts polled in the last 3 months, 3 are ready to take the bullish bet on Verizon stock with 6 playing it safe on the sidelines. Is the stock overvalued or undervalued based on these analysts’ expectations? Consider that the 12-month average price target of $54.86 implies nearly 3% in upside potential.