VZ Stock: Verizon Earnings Forecast Misses Estimates Amid Consumer Wireless Struggles

Verizon Communications (VZ) on Tuesday reported fourth-quarter adjusted profit in line with estimates, but its 2023 profit outlook was missed. VZ stock reversed as more aggressive wireless promotions, primarily smartphone subsidies, were expected to impact 2023 earnings.




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For the December quarter, Verizon’s earnings were $1.19 per adjusted share, down 10% from a year earlier excluding items. Revenue rose 3.5% to $35.3 billion.

A year earlier, Verizon earned $1.31 a share on revenue of $34.1 billion. Analysts had forecast Verizon earnings of $1.19 per share on revenue of $35.1 billion for the quarter.

Verizon said it added 217,000 postpaid wireless phone subscribers, versus analysts’ estimates for a gain of 201,000, including consumer and business subscribers. Verizon added 41,000 consumer subscribers in the fourth quarter. During the September quarter, Verizon lost 89,000 consumer lines.

In trading today, Verizon stock rose 2% to close at 40.42. Shares initially fell on the earnings release. Ahead of Verizon’s earnings report, VZ stock had edged up 1.6% in 2023.

Stock VZ: orientation failures 2023

For 2023, Verizon said it expects adjusted earnings per share of $4.70, at the midpoint of guidance. Verizon did not provide a total revenue outlook. It projects wireless revenue growth of 3.5% versus estimates of 2.5%.

VZ stock analysts polled by FactSet had estimated 2023 earnings at $4.96 per share with revenue up 1.2%.

“For context, VZ’s guidance implies that Adjusted EPS will decline to levels last reported in 2018 ($4.71),” Goldman Sachs analyst Brett Feldman said in a note to clients. VZ shares are down around 20% since Hans Vestberg took over as chief executive in August 2018.

Verizon expects adjusted EBITDA β€” earnings before interest, taxes, depreciation, and amortization β€” in the range of $47 billion to $48.5 billion, estimates missing. Analysts had predicted growth of 1.5% to $48.7 billion.

Verizon Stock: Capital Spending Will Fall

Oppenheimer analyst Tim Horan said in a note that Verizon offered “weak financial advice.” He added: “2023 EBITDA flat vs. 2022, on wireless revenue growth of 3.5%, but EPS down 9% on higher interest/amortization/other expenses.”

Verizon in December shook up its consumer wireless business. Additionally, Verizon let go of Manon Brouillette, who joined the company in June 2021 and was promoted to general manager of the consumer business in January 2022. Vestberg took over Brouillette’s duties.

“Capital spending in 2023 is expected to fall more than $4 billion year-over-year as 5G network spending recedes, providing a clear tailwind to free cash flow,” Craig said. Moffett, SVB MoffettNathanson analyst, in a note.

He added, β€œThe growth metrics are uninspiring, especially considering that their wireless revenue growth forecast includes an approximate 190 basis point benefit from revenue reallocation previously classified as ” other income “. “

Meanwhile, rival AT&T (T) reports its fourth quarter results on Wednesday. AT&T’s free cash flow outlook will be critical, analysts say. AT&T stock lost a fraction.

Verizon stock fell 24% last year. VZ stock holds a relative strength rating of 29 out of a possible 99, according to IBD Stock Checkup.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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