It’s been a busy start to the year on Wall Street with a deluge of stock upgrades and downgrades.
The street-note stampede is shaping the early 2024 action for a number of stocks—most notably
Apple
and
Moderna.
Verizon Communications
is another stock seemingly enjoying a new-year boost gift-wrapped by Wall Street.
KeyBanc Capital Markets upgraded shares of the telecom firm to Overweight from Sector Weight, and said the company faced a favorable wireless industry setup in 2024, in a note Tuesday. The stock jumped 3.1% Tuesday, and was pointing 1% higher ahead of the open Wednesday. Their price target is $45, implying 16% upside to Tuesday’s closing price.
KeyBanc’s note is titled ‘New Year, New
Verizon
’ and that certainly seems to be accurate for the shares so far this year. The stock fell 4% in 2023, and is on track to recoup much of that on the second trading day of 2024.
Shifting fortunes is an early theme of the year, if that’s even possible just one day in.
Moderna
and
Apple
were two clear examples. Moderna shares, the worst performing in the S&P 500 in 2023, surged 13% on Jan. 2 following an upgrade from Oppenheimer.
Apple stock, up nearly 50% last year, fell 3.6% on Jan. 2 to a seven-week low after Barclays downgraded the shares to Underweight from Equal Weight.
In keeping with that, KeyBanc analysts expect 2024 to be one of the best in recent history for Verizon. Analysts led by Brandon Nispel said they expected Verizon’s growth in earnings before interest, taxes, depreciation, and amortization to rise to above 2% in 2024, from flat last year—its second-fastest growth rate since 2018.
They also noted that it currently trades at historically low levels—with a forward enterprise value-to-Ebitda ratio of 6.25 times compared with its three-year average of 6.9 times.
The analysts also expect postpaid-phone subscriber growth to continue at above average pace for the industry, with capital expenditure also coming down. The lack of competitive intensity in the sector was another reason behind the upgrade.
“Wireless carriers appear complacent with their performance, and no one wants to ‘rock the boat,’ which makes us want more wireless exposure,” they added.
T-Mobile US
stock was also pointing higher early Wednesday, up 0.3% in premarket trading, while shares of
AT&T
edged 0.1% higher.
Write to Callum Keown at callum.keown@barrons.com
Read the full article here
