Investors wanting to dial into some robust, double-digit growth would do well to buy Verizon Communications (VZ +0.28%) stock. That's the view of one analyst tracking the giant telecom -- and he reiterated his bullish take on the shares just after the release of first-quarter results toward the end of April.
Let's pick that recommendation apart a bit. Is Verizon truly worthy of your investment dollars?
An unambiguous buy recommendation
The person behind this Verizon analysis is Oppenheimer's Tim Horan, who expressed his continuing belief in the company even after those results, which some investors considered subpar. This was due to several factors, not least the sluggish (0.2%) year-over-year revenue growth that, at $33 billion, didn't quite reach the average analyst estimate. Non-GAAP (adjusted) earnings per share also fell although that figure did top prognosticator expectations.
Horan saw several positive developments in that earnings report. He wrote in his research note that Verizon "continues to build on strong momentum from 2023, which has been driven by major network upgrades, refreshed management, and improved go-to-market." He feels that results were a bit skewed due to price increases enacted in January that, in his view, negatively affected volume. One-time expenses also dampened the financials.
In his note, Horan maintained his buy recommendation on Verizon and his $48 per-share price target. That implies a potential upside of nearly 21% from the stock's current level.
NYSE: VZ
Key Data Points
Reliably successful, reliably generous
Verizon is a monster telecom company, but we should accept that it'll probably never show hot growth on either the top or bottom lines. Rather, it's a steady operator that -- barring some black-swan event -- should continue to post healthy profits and throw off cash from its massive user base. A share price of around $40 is a bargain, in my view.
Wisely, Verizon aggressively returns capital to its shareholders in the form of a high-yield dividend, which tips the scales these days at nearly 7%. So this is a reliable operator in an essential business that rewards investors regularly -- and generously.
