BMO Capital Markets Outperform on Verizon

BMO Capital Markets is out with a research report on Verizon VZ and it has an Outperform rating and a $42 price target on shares. In a note to clients, BMO Capital Markets writes, "On its H1 2011/12 results conference call Vodafone reconfirmed that Verizon Wireless US$10B special dividend is payable January 2012 and commented that the potential for another dividend thereafter is a year-by- year decision to be made mid-year, with the decision driven by: (1) Verizon Wireless' capital needs; and (2) Verizon Communications' own dividend coverage needs. This suggests that a dividend $7B+ could be expected in early 2013, though this could be negated if Verizon lends VZW funds for asset acquisitions in the next year. In terms of European data trends: (1) Smartphone adoption and data usage continues to lag North America. Vodafone's consumer postpaid smartphone penetration is 37% (vs. AT&T 53%, Verizon 39%, Rogers 52% and Bell 43%), data attach rate on smartphones at 59%, smartphone data usage at 130 MB/month (vs. 1,400 MB/month/user for mobile broadband) and data traffic mix skewed much more toward broadband at 79% (vs. 21% smartphones); (2) Pricing and bundled plans are key to preventing voice/SMS substitution." Shares of VZ are off 40 cents to $37.12, a loss of 1.07%.