Verizon Communications (VZ) stock popped after the telecom giant delivered strong second-quarter results and raised its full-year profit guidance. The company lifted the lower end of its full-year earnings forecast, crediting tax reforms and its first-half performance. The company now anticipates adjusted earnings per share to grow between 1% and 3% for the year, up from the previous forecast of 0% to 3%. Following the results, VZ stock gained almost 5% in pre-market trading hours.
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Verizon Beats Q2 Estimates
Verizon reported a strong second quarter, with both revenue and profit surpassing analyst expectations. Operating revenue climbed 5.2% year-over-year to $34.5 billion, topping Wall Street’s $33.7 billion estimate. Among its segments, Wireless service revenue, which is Verizon’s largest segment, grew 2.2% year-over-year to $20.9 billion.
Meanwhile, net profit rose nearly 9% to $5.1 billion. Excluding one-time items, Verizon reported adjusted earnings of $1.22 per share for the quarter, slightly ahead of the $1.20 per share expected by analysts.
Looking ahead, the company also raised its full-year free cash flow forecast to $19.5–$20.5 billion, up from its previous estimate of $17.5–$18.5 billion.
Verizon Faces Fierce Competition
Like other telecom companies, Verizon is finding it hard to attract new customers in a competitive market. In April, Verizon pledged to freeze prices for many of its customers for three years to help keep them from switching.
The company is facing intense competition as rivals such as AT&T (T) and T-Mobile (TMUS) continue to run nonstop promotions, luring customers with better deals. Verizon is also facing tough competition in home internet, as more fixed-wireless services enter the market.
Is Verizon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on VZ stock based on seven Buys and eight Holds assigned in the past three months. At $47.92, the average Verizon stock price target implies a 17.34% upside potential.
