Verizon's Positive Pricing Strategy Supports Future Growth, Broadband Growth to Rely on Fiber and Fixed Wireless: Analyst

Goldman Sachs analyst James Schneider maintained a Buy rating on Verizon Communications Inc VZ with a price target of $52.

Schneider summarized Verizon’s third-quarter print. Verizon’s quarterly results aligned closely with expectations.

Revenue was $33.3 billion, matching Goldman Sachs’ estimate but slightly below the consensus of $33.5 billion.

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Adjusted EBITDA reached $12.5 billion, just above both Goldman Sachs’ forecast of $12.43 billion and the Street’s $12.40 billion.

Free cash flow was $6.0 billion, aligning with Goldman Sachs’ $6.1 billion and just ahead of the Street’s $5.9 billion.

Total wireless service revenue rose 2.7% year-over-year to $19.84 billion, slightly under Goldman Sachs’ $19.87 billion and the Street’s $19.89 billion.

Postpaid phone net additions of 239,000 exceeded Goldman Sachs’ 225,000 estimates and the Street’s 231,000. Consumer revenue totaled $25.4 billion, matching Goldman Sachs’ projection but below the Street’s $25.6 billion.

Business revenue stood at $7.4 billion, which aligns with both estimates.

Verizon reaffirmed its 2024 guidance, projecting wireless service revenue growth between 2.0% and 3.5%, aligning with Goldman Sachs’ and the Street’s expectations of 3.2%.

Adjusted EBITDA growth is forecasted at 1.0% to 3.0%, compared to Goldman Sachs’ estimate of 2.2% and the Street’s 2.3%.

The company maintained its adjusted EPS outlook of $4.50 to $4.70, in line with Goldman Sachs’ $4.61 and the Street’s $4.59.

Capital expenditure guidance remains set at $17.0 to $17.5 billion, close to Goldman Sachs’ $17.3 billion and the Street’s $17.2 billion.

Schneider expects a muted stock reaction after an in-line quarter, where business postpaid phone net additions exceeded his estimates but consumer additions fell slightly short.

He noted that investor positioning was fairly neutral before the results, with optimism among bulls driven by positive pricing strategies supporting EBITDA growth amid a more favorable competitive environment.

With the quarter aligning with expectations and guidance unchanged, Schneider expects investor focus to shift to Verizon’s upcoming broadband presentation, where fiber and fixed wireless are expected to play key roles in the company’s future broadband expansion strategy.

Price action: VZ stock is down 4.77% at $41.62 at the last check on Tuesday.

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