Telecommunications giant Verizon (VZ) fell over 6% after Wolfe Research downgraded the stock from “Outperform” to “Peer Perform.” The downgrade followed Verizon’s investor presentation at the Deutsche Bank Conference, where concerns grew about the company’s ability to keep pace with rising competition. Adding to the pressure, Verizon recently warned of weak subscriber growth, triggering the stock’s biggest one-day drop since 2002.
Verizon Blames Competition for Subscriber Slowdown
At the conference, Verizon’s Chief Revenue Officer, Frank Boulben, described the first quarter as “unusual,” citing slower subscriber growth.
He attributed the slowdown to aggressive promotions from competitors. While Verizon reduced its promotional efforts after a strong December, rivals did not, intensifying market competition. As a result, the company expects a slight decline in new postpaid subscribers and a small rise in customer churn during the first quarter.
Market Reaction to Verizon’s Cautious Outlook
Investors reacted negatively to Verizon’s cautious tone. Many worry that the company may struggle to maintain growth while facing tough competition.
Wolfe Research’s downgrade reflects these concerns. Analysts believe Verizon’s decision to scale back promotions could hurt customer retention, especially as competitors continue their aggressive strategies. The firm contends that though Verizon’s cash flow stays strong, balancing profitability with customer retention could be a tough task for the company.
Is Verizon Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on VZ stock based on six Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 15.54% rally in its share price over the past year, the average VZ price target of $46.07 per share implies 6.08% upside potential.
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