What's Happening With VZ
Verizon (VZ) will announce its second-quarter results before the market open on July 26. Analysts forecast earnings of $0.94 per share, down from $1.04 during the same period last year. The stock has been a top-performer in 2016, with shares appreciating 21.1% year to date.
VZ was recently trading at $55.99, just $0.96 below its 12-month high and $17.93 above its 12-month low. Overall technical indicators for VZ are bullish, and the stock is in a strong upward trend. The stock has recent support above $55.00, and recent resistance below $56.95. Of the 24 analysts who cover the stock, seven rate it a “strong buy”, three rate it a “buy”, 13 rate it a “hold”, and one rates it a “strong sell”. The stock receives S&P Capital IQ’s 3 STARS “Hold” ranking.
Verizon’s biggest competitor, AT&T (T) already reported its quarterly number, posting earnings that were in-line with the consensus, and revenues slightly weaker than forecast. Despite the slightly weaker revenue number, Wall Street drove T shares higher, which in turn pushed VZ shares slightly higher. The big thing to watch for in Verizon’s report is how many customers the company was able to add during the quarter. The wireless market in the U.S. is fairly saturated, and competition is fierce between the major carriers to attract as well as retain customers. While the company’s quarterly report will drive the stock’s direction, the biggest news surrounding Verizon is the fact it could possibly announce an acquisition of Yahoo (YHOO) in the near future. Verizon has emerged as the forerunner in Yahoo’s attempt to find a possible suitor, a deal that could be worth as much as $5 billion. The deal follows last year’s AOL purchase, and if Verizon is able to combine the content and advertising technology of both companies, it will be able to somewhat compete with heavyweights Alphabet (GOOGL) and Facebook (FB) in the online advertising arena. Yahoo captures a very small 3.6% of all online advertising, but it remains the fifth-most visited site in the U.S., so the potential is there if execution improves. The Street has a whisper number of $0.96 for Verizon’s quarter, which is two pennies higher than the consensus, and if Verizon is able to hit that estimate the stock will move higher, but it is the Yahoo news that will really drive the stock if and when it is announced.
About Verizon Communications Inc.
Verizon is now primarily a wireless business (70% of revenue and nearly all operating income). It serves about 89 million postpaid and 4 million prepaid phone customers and connects another 24 million data devices, like tablets, via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks (12% of revenue) in the Northeast, which reach about 25 million homes and businesses, and nationwide enterprise services (10%). Recent investments, including fiber network construction, have supported the wireless business in addition to expanding traditional fixed-line capabilities. Verizon Media Group, the online media and advertising firm formed with the acquisitions of AOL and Yahoo, provides the remainder of revenue.