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The firm’s bullish view of the stock is based on four factors, with the first being that the wireless industry’s competitive intensity is low, which makes the firm want more wireless exposure.
In addition, KeyBanc said VZ should show better postpaid phone net add performance. The second factor is VZ’s broadband subscriber growth “far outpacing” AT&T’s.
“VZ EBITDA growth should go from 0% in ’23 to >2% in ’24, which would represent VZ’s second fastest adj. EBITDA growth rate since 2018,” added the analysts, who also believe that with capital spending coming down, VZ has higher quality cash flows compared to AT&T.
“With VZ trading at historically low absolute/relative EV/EBITDA, improving Wireless KPIs and financial metrics, investors are likely to see a deleveraging story with the potential for share repurchases into ’25,” concluded the analysts.
