Verizon Communications Inc. (NYSE: VZ) stock has lagged the market so far in 2018, but the company is hoping a change of leadership can get the stock back on track. On Friday, Verizon announced chief technology officer Hans Vestberg will take over as CEO in August, and analysts say Verizon investors should continue to be patient.
Vestberg will take over for Lowell McAdam, who has served as CEO since 2011. During McAdam’s tenure, VZ stock has gained 35 percent, well short of the 115.3 percent gain of the S&P 500 in that time.
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Vestberg joined Verizon as chief technology officer roughly a year ago. Prior to his tenure at Verizon, Vestberg served as CEO of telecommunications equipment supplier Ericsson ( ERIC) for six years.
“I am humbled to be appointed CEO of Verizon at such an exciting and dynamic time for our company and industry,” Vestberg says in a statement. “We are experiencing unprecedented changes in the way users interact in the digital world, and we are racing ahead to remain at the forefront of technology, connectivity and mobility.”
Vestberg’s appointment comes during a tumultuous period in the telecommunications industry. In recent quarters, Verizon has been losing postpaid subscriber market share to T-Mobile US ( TMUS), which recently agreed to a buyout of Sprint Corp. ( S). Analysts expect the merger, which would potentially join the third- and fourth-largest U.S. wireless providers, will face intense regulatory scrutiny.
Verizon’s largest competitor, AT&T ( T), is roughly a week away from a ruling on its own buyout offer for Time Warner ( TWX). The Department of Justice sued to block the deal on antitrust grounds.
Verizon is also expecting to be the first U.S. provider to launch a 5G network later this year.
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Bank of America analyst David Barden says there are plenty of reasons for long-term Verizon investors to be optimistic about a turnaround. In addition to the stock’s generous 4.8 percent dividend yield and attractive earnings multiple, Barden says Verizon has a strong balance sheet and is well-positioned to outperform its peers.
“VZ has the most defensible wireless subscriber base in the industry with superior profitability,” Barden says. “We expect Verizon’s earnings growth to outpace peers.”
Bank of America has a “buy” rating and $58 price target for VZ stock.
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Verizon Communications Inc. (VZ) Names New CEO Ahead of 5G Rollout originally appeared on usnews.com
