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Verizon hits five-year low showing no signs of growth in the future

Verizon hits five-year low showing no signs of growth in the future
Dino Kurbegovic

Verizon shares (NYSE: VZ) hit their lowest level since 2017 as a reaction to a weaker than expected quarterly earnings report. The profit expectations were narrowly missed; however, after a big miss in wireless subscription growth, the company cut its guidance, which led the stock to close the trading session on July 22, down by 6.74%.

In addition, the earnings highlighted flat revenues of $33.8 billion, flat growth year-on-year (YoY), while earnings per share (EPS) were $1.31, missing expectations by $0.01. Furthermore, Becky Quick analyzed the earnings on CNBC’s Squawk Box, underlining that there seems to be little to no growth for Verizon in the near future.  

“They’re now looking for adjusted EPS of $5.10 – $5.25; the earlier guidance was $5.40 – $5.55, so that’s a significant drop. Also lowering their expectations in terms of reported wireless service revenue growth, now looking to 8.5% – 9.5%, versus an earlier view of 9% – 10%; and their service and other revenue growth, they’re now looking for -1% to flat versus what they have been expecting, approximately flat.”   

VZ chart and analysis 

VZ shares are currently making a new 52-week low, with the short-term trend looking very negative, as the previous support lines have been broken. Further, the support line is now at $43.17, while the resistance has been moved to $45.89. 

What’s more, trading volumes are considerably up compared to the previous sessions, with the stock now down 15.24% year-to-date (YTD).

VZ 20-50-200 SMA lines chart. Source. data. See more stocks here.

Analysts rate the shares a ‘hold’, predicting that the price shares will change hands in 12 months will reach $55.08, 23.91% higher than the current trading price of $44.45.

Wall Street analysts’ price targets for VZ. Source: TipRanks  

Verizon’s earnings followed another telecom firm, which had sub-par earnings, namely AT&T (NYSE: T), which released its report on July 21. These two names in tandem dragged down the telecom sector, usually touted for its defensive characteristics. 

Despite the miss by these two telecom giants, Citi Groupe (NYSE: C) analysts remain upbeat about the sector, expecting solid growth. 

Nevertheless, investors looking to get into the telecom space, particularly with Verizon, would be prudent to wait a bit longer for the prices to settle before deciding to jump in, as more volatility could be in store for VZ shares.   

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