The New York-based Verizon Communications Inc. (VZ) is a leading player in the global telecommunications industry with a market cap of $174 billion. The company operates through its two segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business).
Companies valued at $10 billion or more are generally considered "large-cap" stocks, and Verizon fits this criterion perfectly. Verizon's position as the world's second-largest telecommunications company by revenue is fortified by strategic mergers, innovative partnerships like with Amazon Web Services for low-latency applications on 5G, and a diverse array of revenue streams spanning wireless, wireline, and content services, solidifying its significant presence and impact in the market.
However, the telecom operator has fallen 5.1% from its 52-week high of $43.42. Shares of Verizon are up 3.4% over the past three months, underperforming the broader Nasdaq Composite's ($NASX) 5.3% gain over the same time frame.
Longer term, VZ is up 8.5% on a YTD basis, lagging behind the NASX's 14.2% gains. Moreover, shares of Verizon have gained 16% over the past 52 weeks, compared to NASX's 30.8% gains over the same time frame.
However, VZ has been trading above its 200-day moving average since November last year and has mostly remained above its 50-day moving average during this period despite some fluctuations.
Verizon's underperformance can be attributed to challenges in gaining traction with 5G amid stiff competition, coupled with its struggle to deliver significant revenue growth. Plus, the stock initially fell 4.7% on April 22 due to revenue shortfall and postpaid net subscriber losses in Q1, but rebounded the next day, driven by positive investor sentiment spurred by robust wireless services revenue and subscriber gains.
Nevertheless, rival AT&T Inc. (T) is still underperforming – not just VZ but the broader equity benchmarks. AT&T stock has gained 12.3% over the past 52 weeks and is up 7.8% on a YTD basis.
Despite the stock’s underwhelming price action, analysts think VZ can recover soon. The stock has a consensus rating of "Moderate Buy" from the 21 analysts in coverage, and the mean price target of $44.49 is a premium of just 7.7% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
