Fundamental Analysis: VERIZON. (#VZ)

Verizon #VZ, the largest US cellular operator by number of subscribers, pointing to significant undervaluation of the company by the market and growth in revenue in the segment of business services.


⚡️ Growth factors:

• The stock has lagged well behind the broader market over the past two years and is now trading at P / E = ~ 11x versus 20x for the S & P500.

• The company has focused its efforts on increasing revenues from the business services segment, as more and more customers are switching to advanced tariff plans. Overall, the number of paid subscribers is expected to grow by 1.3% yoy, new account registrations by 1.4% and cable TV revenue by 54bp.

• Although the application of AS606 (revenue recognition) was a 75bp decrease in revenue, this will be partially offset in the current quarter by the end of the Disney + promo subscription period, adding 26bp. in the current quarter and 85 bp. In the first quarter of 2021, the Company launched a promotional campaign on November 12 last year, more than 5 million subscribers used the offer in the first 60 days.

• Resolving the problem of shortage of radio spectrum and the growth of 5G technologies.

• Synergy effect from the purchase of the wireless operator Tracfone for $ 7.15 billion, which currently amounts to ~ 9x the company's EBITDA for next year, but, according to J.P. Morgan, after reaching synergy can drop to ~ 4x.


💎 Shares of telecom companies have lagged behind the broader market for a long time, it is quite possible that the situation could change as many investment banks write about it, especially against the background of the deployment of 5G networks.


🎯 Target price - $ 65, growth potential + 9%.








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