Why Tigress Financial Is Bullish On Verizon, AT&T

Tigress Financial Partners is turning bullish on Verizon Communications Inc. VZ and staying bullish on its rival AT&T Inc. T.

The Verizon, AT&T Analyst: Ivan Feinseth upgraded Verizon from Neutral to Buy and maintained a Buy rating on AT&T's stock.

The Verizon Takeaways: Verizon ended 2020 with a full-year revenue decline of 2.71% at $128.29 billion, but the company is on track to reverse losses and generate revenue of $134.59 billion in 2021, Feinseth wrote in the upgrade note.

Leading the revenue growth will be the company's continued 5G rollout and continued growth in the wireless market, he said. 

The late 2020 acquisition of TracFone for $6.3 billion will add 21 million new customers to Verizon's network and greater exposure to the prepaid segment, which performs well during a recession, the analyst wrote.

The acquisition of video chat company Blue Jeans Network will also add exposure to another hot segment, as more people will continue working from home even after COVID-19 lockdowns are removed.

Meanwhile, Verizon boasts an attractive balance sheet with $19.78 billion in excess cash, and this can be used for ongoing capital investments, new acquisitions, dividend increases and a resumption in share purchases that were paused in 2015, according to Tigress. 

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The AT&T Takeaways: AT&T hosted an analyst day presentation on March 12 that detailed management's growth plans in terms of streaming content and the wireless business, Feinseth wrote in a separate note.

Most notably, management guided for revenue from HBO subscribers to double from current levels to $15 billion by 2025.

The ongoing 5G network rollout will also be counted on to generate revenue growth, as it will drive improved connectivity on the Internet of Things, including connected cars, homes, and more, he said. 

AT&T also communicated a plan to reduce debt while simultaneously driving growth, improving margins, strengthening the balance sheet and delivering superior value to investors. Management did pause its share buyback program due to the pandemic, but remains committed to a 60% dividend payout ratio, Feinseth said. 

VZ, T Price Action: Shares of Verizon were trading higher by 0.75% Wednesday at $57.34, while shares of AT&T were higher by 0.37% at $30.11.