On Friday, Redburn-Atlantic made an adjustment to its rating on Verizon Communications (NYSE:VZ), upgrading the stock from Sell to Neutral. Alongside the upgrade, the firm also increased its price target for Verizon shares to $39.00, up from the previous target of $33.00.
The firm cites several factors behind its improved outlook for Verizon. The activation of the C-Band spectrum is expected to bolster the company's net add performance. Additionally, Verizon may gain from the recent decline in interest rates, as a significant portion of its debt, approximately 26%, is subject to variable interest rates.
Redburn-Atlantic also points to Verizon's dividend, suggesting that it is well-covered. This assessment is based on a conservative measure of free cash flow, referred to as the 'True View' FCF. The firm's valuation model, which is DCF-based (Discounted Cash Flow), indicates a potential downside of 4% from the current share price of $40.4.
The revised price target of $39.00 reflects the firm's updated analysis and suggests a more favorable stance towards Verizon's financial health and market position. The upgrade and new price target represent a shift in expectation for the telecommunications giant's performance in the near term.
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