Verizon's Place As A High-End Provider Could Be In Jeopardy
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.
Image Credit: By Anthony92931 (Own work) [CC BY-SA 3.0], via Wikimedia Commons
Latest Ratings for VZ
|Apr 2017||SunTrust Robinson Humphrey||Initiates Coverage On||Hold|
|Jan 2017||Evercore ISI Group||Initiates Coverage On||Hold|
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