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Investing.com - KeyBanc Capital Markets maintained its Sector Weight rating on Verizon Communications (NYSE:VZ) on Tuesday, while adjusting its 2025 and 2026 adjusted EBITDA estimates upward. The telecom giant, currently generating $49.89 billion in EBITDA and trading at a P/E ratio of 9.5, maintains a strong market position with $137 billion in revenue.
The research firm cited more negatives than positives in Verizon’s second-quarter results, suggesting the stock’s positive market reaction was likely due to previously negative investor positioning rather than fundamental improvements. According to InvestingPro analysis, Verizon maintains a GOOD financial health score, with 8+ additional key insights available to subscribers.
KeyBanc noted that while Verizon surprised with an adjusted EBITDA increase, this appeared to be accompanied by reduced expectations for improving postpaid phone net additions in 2025 compared to 2024, along with potential additional cost-cutting measures. Despite these challenges, Verizon maintains a significant 6.38% dividend yield and has increased dividends for 20 consecutive years.
The firm highlighted three ongoing challenges for Verizon: lagging postpaid phone net additions and wireless service revenue compared to competitors, AT&T’s stronger position in fiber and convergence offerings, and concerns about future free cash flow allocation.
KeyBanc specifically mentioned that savings from Verizon’s One Fiber initiative would likely be directed toward investment following the Frontier Communications (OTC:FTRCQ) acquisition, potentially limiting capital returns to shareholders and negatively impacting the company’s leverage position.
In other recent news, Verizon Communications reported better-than-expected earnings for the second quarter of 2025. The company achieved an adjusted earnings per share of $1.22, surpassing the forecast of $1.19, and its revenue exceeded expectations, reaching $34.5 billion against a projected $33.71 billion. Following this earnings announcement, Verizon’s stock experienced a rise, reflecting positive investor sentiment. Additionally, Goldman Sachs reiterated its Buy rating on Verizon, maintaining a price target of $52.00, after the company raised its 2025 guidance for EBITDA and free cash flow. JPMorgan, on the other hand, raised its price target for Verizon to $49.00 from $47.00, while maintaining a Neutral rating, citing the company’s focus on profitability over subscriber growth. Verizon CFO Tony Skiadas emphasized the company’s aim to improve volumes year-over-year while prioritizing key financial priorities. These developments highlight Verizon’s strategic focus on financial performance amidst a competitive landscape.
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