Telecom & Wireless

Will Verizon Follow the Same Earnings Path as AT&T

Chris Lange

Published: July 25, 2016 4:12 pm

Last Updated: January 13, 2020 5:18 am

Verizon Communications Inc. (NYSE: VZ) is scheduled to release its most recent earnings report before markets open on Tuesday. Ahead of this earnings report, this telecom giant announced that it will acquire Yahoo! Inc. (NASDAQ: YHOO) for a total of $4.83 billion. More details are still surfacing about the deal and what will happen. But the question pertaining to earnings is how Verizon will match up against its rival AT&T, Inc. (NYSE: T).

AT&T and Verizon are not flash companies in the world of high tech, but they have been perfect investments as the market has rallied.

As for AT&T earnings, the company posted $0.72 in earnings per share (EPS) on $40.52 billion in revenue in the second quarter. Consensus estimates from Thomson Reuters called for $0.72 in EPS on $40.62 billion in revenue. Free cash flow rose to $4.8 billion, and the company said it expects to meet or exceed full-year guidance.

Accordingly analysts were fairly positive on AT&T after the earnings report. Can Verizon match this performance? Verizon’s consensus estimates from Thomson Reuters called for $0.92 in earnings per share (EPS) on $30.95 billion in revenue. The same period from the previous year had $1.04 in EPS on $32.22 billion in revenue.

Prior to the release of the earnings report, a few analysts weighed in on Verizon:

• RBC Capital Markets reiterated a Buy rating.
• Citigroup downgraded to a Market Perform rating.
• Oppenheimer downgraded to a Market Perform rating from Outperform.
• Deutsche Bank reiterated a Hold rating with a $52 price target.
• Macquarie reiterated a Neutral rating with a $55 price target.
• Baird reiterated a Neutral rating with a $54 price target.
• Argus reiterated a Buy rating.

So far in 2016 Verizon has outperformed the broad markets with the stock up 25%. Over the past 52-weeks the performance is roughly the same.

Shares of Verizon were last trading down about 0.6% at $55.77. The stock has a consensus analyst price target of $53.24 and a 52-week trading range of $38.06 to $56.95.

Shares of Yahoo were recently trading down 2.6% at $38.35, with a consensus analyst price target of $41.95 and a 52-week trading range of $26.15 to $39.42.

AT&T shares were recently trading down 0.6% at $42.87. The stock has a consensus analyst price target of $42.27 and a 52-week trading range of $30.97 to $43.89.