Verizon Adds Fewer Postpaid Subscribers Than Expected In 4Q; Shares Drop

Verizon Communications added 279,000 postpaid subscribers during the fourth quarter, falling short of the 443,100 forecasted by analysts. The telecoms giant’s shares were down by 3.2% and closed at $56.57 on Jan. 26.

Verizon (VZ) reported 703,000 retail postpaid net subscribers in 4Q, which included 442,000 postpaid smartphone net additions. The company’s total wireless segment revenue rose 2.2% year-on-year to $16.7 billion during the quarter.

The company’s 4Q earnings of $1.21 per share came in ahead of analysts’ estimate of earnings of $1.17 per share. Revenue for 4Q declined 0.2% year-on-year to $34.7 billion and was slightly higher than the Street consensus $34.4 billion.

Verizon CEO Hans Vestberg commented, “2020 was marked by transformational change, including the launch of our 5G nationwide network. We witnessed a mass shift toward virtual collaboration, touchless retail and delivery, remote work, distance learning, and telemedicine. We continued to execute our multi-use network strategy.” (See VZ stock analysis on TipRanks)

The company also provided a FY21 outlook and expects year-on-year revenue growth in its wireless services segment of at least 3%. Services and other revenues are projected to grow year-on-year by at least 2%. Verizon forecasted adjusted non-GAAP earnings to generate between $5 to $5.15 per share.

The company sees its capex to be in the range of $17.5 billion to $18.5 billion for the expansion of its 5G and wireless network and deployment of its fiber infrastructure.

Oppenheimer analyst Timothy Horan assigned a Buy rating and set a price target of $70 for the stock. Horan commented on the company’s 4Q results, “VZ reported a mix quarter with revenue/subs missing our forecasts but beat on margins/profitability. Business/Media segments are improving as COVID-19 headwinds subside. The focus will be on FCF and the balance sheet; we think VZ will likely have to cut back on CAPX for redesigning its network.”

Overall, analysts are cautiously optimistic about the stock and the consensus is a Moderate Buy with 4 analysts recommending a Buy, 5 analysts suggesting a Hold, and one analyst has a Sell. The average price target of $62.88 implies 11.2% downside potential to current levels.

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