Verizon Analyst Sees Improving Trends As Company Sizes Up AI Opportunity

Verizon Communications, Inc. VZ released earnings for the fourth quarter of fiscal-year 2024 last month. Following the earnings report, Goldman Sachs hosted an investor meeting with key members of Verizon. Here’s what you need to know.

What To Know: CFO Tony Skiadas highlighted improving trends in revenue and cost takeout, with wireless becoming a larger portion of the business, driving high incremental margins and boosting EBITDA. On the cost side, Verizon pointed to savings from an outsourcing deal and the reduction of legacy product and network costs, Goldman Sachs analyst James Schneider wrote in a note.

Furthermore, despite investor skepticism, Verizon expects the wireless market to grow by 8 to 8.5 million net additions in 2025. The company also anticipates year-over-year improvement in its own net additions, supported by efforts to reduce postpaid churn and strengthen prepaid performance, the analyst said.

Additionally, the company expects its AI Connect offering to generate over $100 million in revenue through dark and lit fiber sales. Schneider noted that Verizon also sees opportunities in edge computing and inference, using its data centers and retrofitted central offices for power, space and cooling.

“We believe Verizon's execution in its core wireless business continues to improve – with positive subscriber net additions and better prepaid revenue trends likely to be key drivers for 2025,” the Goldman analyst said

“We also highlight that Verizon's Business segment continues to notably outperform, and we believe this inflection in wireline EBITDA is sustainable and will not likely serve as a drag to overall results going forward.”

Goldman maintained a Buy rating on Verizon on Tuesday with a 12-month price target of $52, as the analyst expects the company to sustain revenue and EBITDA growth over the medium term.

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VZ Price Action: At the time of writing, Verizon shares were trading flat at $40.49, according to data from Benzinga Pro.

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