Verizon Communications (VZ) has successfully acquired TracFone Wireless, Inc. for $3,125 million in cash and 57,596,544 shares of Verizon stock. The deal was announced in September 2020.
Verzion provides wireless and wireline communications services and products. The company also offers video and data services, corporate networking solutions and managed network services.
Notably, Verizon may have to pay an additional $650 million in cash if TracFone continues to achieve certain operating metrics. (See Verizon stock charts on TipRanks)
With this deal, Verizon will be able to cater to its clients with an expanded product portfolio of fixed wireless residential broadband solutions, new device technology, expanded 5G access, a continued commitment to Lifeline services and more international calling and roaming options.
Meanwhile, Verizon disclosed plans to continue offering Lifeline service, along with 5G connectivity options, through TracFone. Also, it seeks to further develop TracFone’s products, distribution channels and core brands.
The CEO of Verizon Consumer Group, Ronan Dunne, said, “We’re thrilled to welcome TracFone and its employees to the Verizon family and look forward to bringing new products and enhanced services to this attractive segment of the market. Our new premium and value customer base will benefit from the combined organization’s offerings—now and in the future.”
“The addition of the TracFone brands firmly establishes Verizon as the provider of choice in the value segment, which complements our clear leadership in the premium segment,” Dunne added.
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Wall Street’s Take
Last month, Wells Fargo analyst Eric Luebchow reiterated a Hold rating on the stock and lowered the price target to $56 from $58, implying 8.2% upside potential to current levels.
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 2 Buys and 5 Holds. The average Verizon price target of $59.43 implies 14.8% upside potential to current levels. Shares have decreased 14.7% over the past year.
TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Verizon’s performance.
According to the tool, in October, the website of Verizon recorded a 21.9% monthly decrease in global unique visits compared to the previous year. However, year-to-date website traffic growth has increased 27.9% against the same period last year.
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