In a report published Tuesday, Morgan Stanley analyst Simon Flannery reiterated an Overweight rating on Verizon Communications VZ, but removed the $54.00 price target.
In the report, Morgan Stanley noted, “Verizon has to balance shareholder returns with cash needs for the upcoming spectrum auctions. We estimate that Verizon could spend ~$6 billion for 20 MHz of spectrum in the AWS-3 spectrum auction (based on 96c per MHz-POP, per recent transactions),and the company may need to retain flexibility for the broadcast incentive spectrum auction, targeted for next year. Meanwhile, we continue to face uncertainty around bonus depreciation, which would provide some near term cash relief. Our bear case assumes that Verizon does not raise the dividend, which would lower the 2015e net income payout ratio to 55%, from 60% in 2014e.”
Verizon Communications closed on Monday at $49.15.
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