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Verizon's Place As A High-End Provider Could Be In Jeopardy

Verizon's Place As A High-End Provider Could Be In Jeopardy
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Verizon Communications Inc. (NYSE: VZ)'s status as being a premium-priced and higher-end "Tiffany network" is now being called into question after the company's first quarter earnings report.

According to Argus' Joseph Bonner, Verizon's "weak" earnings report showed a decline in both revenue and earnings per share and confirms the intense competitive environment within the wireless industry. In fact, Verizon's move to join its competitors in offering unsubsidized phone plans and unlimited data offerings is hurting its organic revenue and earnings, which prompted the analyst downgrade Verizon's stock from Buy to Hold.

The Path Forward Isn't Bright

Moreover, Verizon's gameplan of monetizing increasing data usage isn't expected to be successful in the current "unlimited data environment." Specifically, the company is looking to monetize content with its go90 platform, alliances with the National Football League, the 2015 acquisition of AOL and the pending acquisition of Yahoo! Inc. (NASDAQ: YHOO).

However, the analyst believes it's "unclear" not only how it can monetize the services but how quickly it can show results. Perhaps more alarming, Verizon's management's silence on go90 suggests the unit "may be underperforming."

With that said, Bonner lowered his 2017 full-year earnings per share estimate from $3.84 to 3.79 while 2018's estimates were lowered from $3.95 to $3.88. The analyst also slashed his long-term earnings growth rate to 4 percent.

See Also:

The Most Compelling Hail Mary For Comcast: Charter

T-Mobile's John Legere + 4/20 = Pot Shots At Verizon

Image Credit: By Anthony92931 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Latest Ratings for VZ

Apr 2017ArgusDowngradesBuyHold
Apr 2017SunTrust Robinson HumphreyInitiates Coverage OnHold
Jan 2017Evercore ISI GroupInitiates Coverage OnHold

View More Analyst Ratings for VZ
View the Latest Analyst Ratings

Posted-In: Argus Joseph Bonner Verizon Verizon EarningsAnalyst Color Downgrades Analyst Ratings Tech Best of Benzinga


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