Verizon Communications Inc. Shows Signs of Recovery in 2023
Verizon Communications Inc. experienced a modest 3% increase in its shares in 2023, marking its first positive annual performance in five years. Now, KeyBanc Capital Markets analyst Brandon Nispel believes that even bigger gains may be in store for the company in 2024. In fact, he recently upgraded Verizon's stock from sector weight to overweight, along with setting a price target of $45. This target implies a potential upside of more than 15% from Tuesday's closing price of $38.88.
Nispel notes that investors can expect to witness a promising deleveraging story and the potential for share repurchases by Verizon into 2025. While Verizon will continue to experience declines in its postpaid phone market share, Nispel predicts that the company will show improvement in its share of net and gross additions. He further anticipates that Verizon will achieve growth in its postpaid phone net adds in each quarter of 2024, whereas competitors AT&T Inc. and T-Mobile Inc. may experience deceleration on a year-over-year basis.
In terms of valuation, Nispel finds Verizon's shares to be attractively priced. They are currently trading at 6.2 times enterprise value to estimated 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA). This is slightly lower than the 10-year average multiple of 6.8 times.
As of Wednesday's premarket trading, Verizon's stock had already demonstrated a 1% increase. It appears that the market is responding positively to Nispel's optimistic outlook for the company.