Citi Analyst Sees Q4 Miss Brewing For Verizon Communications

Verizon Communications Inc. VZ shares could take a dip later this week if quarterly earnings reveal higher-than-expected costs, an analyst said Tuesday.

The telecommunications company is slated to post fourth-quarter results Thursday before the bell, and Citi's Michael Rollins predicts the shares will subsequently trade "modestly lower in the near term."

Costs of competition and the company's capacity "aren't fully encapsulated" in the consensus estimate calling for quarterly earnings of $0.74 a share.

Rollins expects earnings will miss expectations by about 5 percent, and come it at $0.70 a share for the fourth quarter.

Investors may learn key details on how Verizon fared at a recent federal auction of broadband spectrum as well as getting an outlook for wireless pricing and its financial implications.

Wireless service providers recently engaged in a war over consumer pricing, and Rollins said more battles may pressure Verizon's prices and margin further.

Rollins reiterated a Neutral rating and $50 target on Verizon, which closed Tuesday at $48.18, up 0.4 percent.