What to Expect From Verizon Earnings

Telecom & Wireless

Published: January 21, 2015 10:20 am

Verizon Communications Inc. (NYSE: VZ) is scheduled to report its fourth-quarter results Thursday before the market opens. Currently Thomson Reuters has consensus estimates of $0.73 in earnings per share on $32.67 billion in revenue. In the fourth quarter of the previous year, Verizon posted $0.66 in earnings per share and revenue of $31.06 billion.

With the increased market volatility of recent days and more of the same on the horizon as higher interest rates loom, safe-yield stocks should be a hot commodity going forward in this market. Along with Verizon, AT&T Inc. (NYSE: T) is also a top pick. Each has an iron-clad balance sheet and yields above 4%, and both participate in one of the hottest sectors in America, wireless communications. Another advantage these companies hold is that their smaller competitors have made no progress in taking wireless market share from either AT&T or Verizon.

Looking ahead, one of the biggest considerations for the coming year for Verizon is the current price war with AT&T, Sprint Corp. (NYSE: S) and T-Mobile US Inc. (NYSE: TMUS). The price war among these giants has put short-term pressure on earnings for Verizon’s wireless segment.

ALSO READ: T-Mobile’s Ugly Future

In the days before its fourth-quarter earnings debut, a couple of analysts gave a mixed view on Verizon. Barclays downgraded the telecom giant to an Equal Weight rating from Overweight and lowered its price target to $51 from $54. However, Canaccord Genuity disagreed and upgraded Verizon to a Buy rating.

The 50-day moving average is at $48.88, and the 200-day moving average is at $47.87. Shares are currently in this area as well, and some lateral movement is expected following the release of earnings.

Verizon shares fell 0.6% at $47.87 in the first half hour of Wednesday’s trading day. The stock has a consensus analyst price target of $52.35 and a 52-week trading range of $45.09 to $53.66. The market cap is near $200 billion.

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