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Investing.com - Citi has reiterated its Buy rating and $48.00 price target on Verizon Communications (NYSE:VZ) following the telecom giant’s second-quarter earnings report that showed strong financial performance despite mixed subscriber metrics. According to InvestingPro data, Verizon, currently trading at an attractive P/E ratio of 9.66, appears undervalued based on its Fair Value analysis.
Verizon, with its substantial market capitalization of $172.19 billion, posted consolidated service and other revenue growth of 1.6% in the quarter, with EBITDA of $49.34 billion and free cash flow results exceeding Citi’s expectations. The company also raised its CY25 guidance, citing better-than-anticipated EBITDA growth of 4% in the first half of the year and tax benefits from recent legislation. The company maintains a robust dividend yield of 6.64%, reflecting its strong cash flow generation capacity.
Phone net additions fell short of expectations at -9,000 overall compared to consensus estimates of 0, though consumer results were better than anticipated at -51,000 versus consensus projections of -85,000. Business segment additions of +42,000 outperformed expectations of -84,000, while fixed wireless access (FWA) net additions came in at 278,000, which Citi characterized as "on the lighter side."
Verizon expanded its consumer postpaid phone gross adds by 19% year-over-year, helping to offset higher phone churn during the quarter. The company managed to deliver solid financial results despite what Citi described as a "pickup in competition" in the telecommunications market.
Citi expects Verizon shares to trade higher in the near term, citing the slight financial beat against cautious investor sentiment heading into the earnings report.
In other recent news, Verizon Communications reported revenues of $134.8 billion for 2024 and maintained its quarterly dividend at 67.75 cents per share. The company continues to focus on strategic investments to enhance its network and service offerings. Citi analysts reiterated a Buy rating for Verizon, highlighting growth in consumer additions and setting a price target of $48.00. Meanwhile, Morgan Stanley (NYSE:MS) resumed coverage with an Equalweight rating and a $47.00 price target, noting a balanced risk-reward profile. BofA Securities also reinstated coverage with a Neutral rating and a $45.00 price target, pointing to a balanced mix of premium wireless subscribers and fiber strategy. The company recently held its 2025 Annual Meeting of Shareholders, re-electing all board nominees and ratifying Ernst & Young LLP as its independent accounting firm. Shareholder proposals regarding climate lobbying and advertising discrimination were defeated. Verizon’s strategic focus remains on innovation and customer experience to sustain its market position.
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