Verizon Communications Inc. (NYSE: VZ) stock sprang to life on Tuesday morning after the company reported better-than-expected first-quarter revenue and earnings. Analysts say Verizon’s stranglehold on the wireless market is as tight as ever, and the company is well-positioned to outpace its peers when it comes to long-term earnings growth.
Verizon reported first-quarter earnings per share of $1.17 on revenue of $31.78 billion. Both numbers topped consensus analyst expectations of $1.10 and $31.25 billion, respectively. Earnings were up 23 percent from a year ago, while revenue increased 7 percent.
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The most impressive number in Verizon’s report was a net increase of 260,000 retail postpaid connections, well above consensus expectations of 160,000 net connections. Wireless revenue in the first quarter was $21.9 billion, up 4.7 percent. Verizon reported 0.8 percent retail postpaid churn, its fourth straight quarter of 0.8 percent churn or better. Verizon also reported 66,000 net Fios Internet additions and 1.9 percent growth in Fios revenue.
VZ stock has lagged the market so far in 2018, but was up 1.9 percent Tuesday morning following the report.
“We began 2018 with strong momentum, and we expect it to continue throughout the year,” CEO Lowell McAdam says in a statement. “We are positioning Verizon for long-term growth while executing our strategy today and leading the way for the next cycle of growth for the industry.”
Looking ahead, Verizon guided for full-year consolidated revenue growth in the low single-digit percentage range. Excluding the impact of tax reform, Verizon also says it expects low single-digit percentage growth in adjusted EPS this year. Verizon expects to spend between $17 billion and $17.8 billion in capital investments in 2018, including the highly anticipated roll-out of its 5G network.
Bank of America analyst David Barden says Verizon’s earnings beat his expectations by 8 cents per share.
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“It appears the beat is related to the tax rate versus our estimate, as [earnings before interest, taxes, depreciation and amortization] was in-line, but ahead of the Street,” Barden says.
Following the solid quarter, Barden still likes Verizon stock and says the company will likely deliver higher long-term earnings growth than its peers. “VZ has the most defensible wireless subscriber base in the industry with superior profitability,” he says.
Bank of America has a “buy” rating and $58 price target for VZ stock.
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Verizon Communications Inc. (VZ) Stock Surges on Postpaid Ads Beat originally appeared on usnews.com
