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Evercore ISI keeps Verizon stock at in-line after Q1 results, sees selloff as overreaction

EditorEmilio Ghigini
Published 23/04/2024, 11:02

On Tuesday, Evercore ISI maintained its "In Line" rating and a $42.00 price target for Verizon Communications (NYSE:VZ), following the company's first-quarter results for 2024.

Verizon's stock experienced a 4.7% decline, contrasting with the S&P 500's 0.9% gain, which the firm attributed to investor reactions to Verizon's new "Second Number" plan and a perception that the stock was overbought prior to the earnings release.

Despite the market's negative response, Evercore ISI views the sell-off as an overreaction, considering Verizon's solid performance and positive subscriber growth as it heads into the second quarter of 2024. The firm also noted Verizon's reaffirmed outlook for the year as a positive sign of the company's consistent execution.

The "Second Number" plan, which allows customers to add a second line to their existing service, was cited as a minimal contributor to the net addition of consumers in the quarter. However, the plan's impact on the stock indicates a heightened sensitivity among telecom investors to any changes in subscriber trends, even if minor.

Evercore ISI also pointed out the potential implications for the telecom industry of the anticipated end of the Affordable Connectivity Program (ACP), suggesting that investor caution is warranted. The ACP has been a government subsidy program that provides discounted internet service to eligible households.

In summary, while Verizon's first-quarter performance was deemed healthy and in line with expectations, the stock's sell-off reflects broader investor concerns and the industry's reaction to even slight shifts in subscriber dynamics. Verizon's reaffirmed 2024 outlook, along with its steady subscriber and financial results, were highlighted as evidence of the company's strong execution amidst a challenging market environment.

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InvestingPro Insights

Following Evercore ISI's analysis, InvestingPro data provides additional context to Verizon's market position and performance. With a market capitalization of $162.88 billion and a P/E ratio of 9.22 for the last twelve months as of Q4 2023, Verizon stands as a significant player in the telecommunications sector. The company's commitment to shareholder returns is evident with a noteworthy dividend yield of 6.89% and a history of raising its dividend for 19 consecutive years. This consistent dividend payout is a testament to Verizon's financial stability and a key factor for income-focused investors.

InvestingPro Tips further highlight Verizon's low price volatility and its status as a prominent player in the Diversified Telecommunication Services industry. Moreover, analysts predict profitability for the year, reinforcing the positive outlook. For investors seeking more in-depth analysis, there are additional tips available on InvestingPro, including insights on earnings revisions and liquidity concerns. To access these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

Verizon's financial discipline and strategic initiatives, such as the "Second Number" plan, are crucial aspects to consider amid the evolving telecom landscape. As the company navigates market challenges and seizes growth opportunities, these InvestingPro insights can serve as valuable tools for investors assessing Verizon's potential in their portfolios.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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