UPDATE: Bank of America Upgrades Verizon Communications to Buy, Reiterates $55 PT as VOD Deal Overhang Creates Entry Point

In a report published Monday, Bank of America analyst David W. Barden upgraded the rating on

from Neutral to Buy, and reiterated the $55.00 price target. In the report, Bank of America noted, “We are upgrading Verizon to Buy from Neutral on an attractive risk/reward profile, superior fundamental positioning, and potential for post-deal earnings upside. Our price objective of $55 and Verizon's 4.5% dividend yield imply a total return of 21%. VZ now trades at a 5 year low relative PE multiple of 0.86x vs.its 1.15x average. Even referring back to pre-crisis trading '04 to '08, VZ trades at its average of 0.88x. VOD deal-related selling of VZ shares is likely in our view and could drive short-term downside, but looking at pre-crisis valuation lows, we see $43.50 as the downside limit, implying 5% downside net of dividends over a one year holding period in a worst case scenario. On balance, we view this risk/reward tradeoff as attractive.” Verizon Communications closed on Friday at $47.27.