Tuesday, Verizon Communications Inc. (NYSE:VZ) stock received favorable commentary from TD (TSX:TD) Cowen analysts based on its dividend yield and future free cash flow (FCF) prospects. With a current dividend yield of 7.2% and a Price/Book ratio of 1.5, InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model.
The firm sees Verizon as a strong candidate for a "catch-up trade" and anticipates that investors will recognize the company's potential for FCF growth beyond 2027, despite near-term challenges.
TD Cowen's analysis suggests that wireless industry fundamentals are sound, with low churn rates and a robust consumer base capable of absorbing price increases. However, the industry faces headwinds, including a potential decline in phone additions due to market saturation and immigration trends. The analysts note that the potential for tax cuts under the Trump administration could positively impact the sector, though this has not yet been factored into stock prices.
AT&T Inc. (NYSE:T) is expected to deliver in-line fourth-quarter 2024 results and provide detailed guidance for 2025. The company's Analyst Day already set expectations for EBITDA growth and FCF, but more specifics are anticipated. Despite headwinds, including a projected increase in cash taxes, AT&T's FCF outlook supports its capital return plans, including $20 billion in buybacks and maintaining its dividend through 2027.
T-Mobile US Inc. (NASDAQ:TMUS) is also predicted to post in-line results for the fourth quarter of 2024, with guidance for 2025 in focus. Management has indicated that working capital will remain stable year-over-year, and the company is expected to continue executing on its long-term strategies without relying on "convergence."
In the cable sector, TD Cowen anticipates a challenging fourth quarter for 2024, citing the worst performance in history due to factors like storms, industry maturation, and competition from fiber-to-the-home (FTTH) and fixed wireless access (FWA). Charter Communications Inc. (NASDAQ:CHTR) may update its capital expenditure plans, potentially providing some relief amidst a tough quarter for the industry.
Stock performance since October 21, just before the last earnings season, shows mixed results within the telecommunications and cable sectors compared to a flat S&P 500. Verizon's stock is down 13%, while AT&T has remained flat, and T-Mobile has seen a 4% decline. In contrast, Charter Communications is up 7%, reflecting a recovery from valuation lows and the passing of risks associated with the Affordable Connectivity Program (ACP).
In other recent news, EchoStar Corporation has experienced significant shifts in its board of directors and business strategy. James DeFranco has resigned from the board of DISH DBS Corporation, a subsidiary of EchoStar, and Jeffrey H. Blum has been appointed in his place. EchoStar has also terminated its agreement with DIRECTV Holdings, LLC for the acquisition of DISH DBS Corporation, with no termination fees incurred by either party.
Following these developments, the company has undertaken major debt restructuring, issuing new senior secured notes and raising $400 million through a private placement. These efforts have allowed holders of existing DISH Network Corporation (NASDAQ:DISH) convertible notes to exchange their holdings for new EchoStar senior secured notes due in 2030.
Despite a 5% year-over-year revenue decline in the third quarter, totaling $3.9 billion, EchoStar reported growth in its SLING TV subscribers. Analyst firm TD Cowen has revised its outlook on EchoStar, lowering the price target to $30 from $37 while maintaining a buy rating.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.