Wireless giant Verizon has experienced a stock increase of about 8% so far in 2024 and has rebounded by 34% from lows in 2023. The company recently reported Q4 2023 results that exceeded expectations, with earnings at $1.08 and revenue at $35.1 billion, slightly lower than the previous year but ahead of estimates. Verizon has been making strides in the 5G arena, addressing gaps in mid-band spectrum and seeing growth in postpaid phone customers. The company added 449,000 postpaid phone customers in Q4 2023, compared to 217,000 in the same period in 2022.
Verizon is also making progress in the fixed wireless broadband segment, adding 375,000 connections in the previous quarter and drawing in over 3 million users. The introduction of the myPlan program, offering a la carte features and video streaming subscriptions, has been well-received by customers and may contribute to revenue growth and margins. Despite these advancements, Verizon’s stock has declined by 35% since early 2021, consistently underperforming the S&P 500 in recent years. The stock’s returns were -12% in 2021, -24% in 2022, and -4% in 2023, while the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023.
While Verizon faces challenges in outperforming the market, there is potential for a recovery with its growing 5G coverage and subscriber base of over 120 million. The company’s stock trades at just 9x consensus 2024 earnings and offers a thick forward dividend yield of over 6%. Despite limited revenue upside, Verizon’s 5G growth could attract more subscribers and lead to better plan offerings for customers. The current uncertain economic environment with high oil prices and elevated interest rates raises questions about Verizon’s future performance compared to the S&P 500.
Trefis remains cautiously optimistic about Verizon’s stock, setting a price estimate of $43, around 5% higher than the current market price. With a reasonable valuation and potential for subscriber growth through 5G coverage, Verizon may be able to capture more market share and increase revenues. The company’s efforts in the fixed wireless broadband segment and innovative plans like myPlan could further drive customer engagement and long-term financial success. Investors should keep an eye on Verizon’s performance in the evolving telecommunications landscape and how it navigates challenges to achieve sustainable growth in the future.
