Verizon Communications recently reduced its adjusted earnings guidance for fiscal 2022.
David Paul Morris/Bloomberg
Wall Street rarely like to talk about its bad calls, but BofA is now admitting it was wrong on its optimistic view for Verizon Communications stock.
On Thursday, analyst David Barden lowered his rating on Verizon (ticker: VZ) to Neutral from Buy, citing the company’s latest mixed financial report and 5G’s lack of progress in driving additional demand. He also reduced his stock price target to $51 from $64. Verizon shares have fallen more than 5% since the company reported earnings last Friday morning. The stock fell slightly on Thursday to $44.83.
Last week, Verizon posted second-quarter earnings roughly in line with expectations, but reduced its adjusted earnings guidance for fiscal 2022 to a range of $5.10 and $5.25 a share, from its prior forecast of $5.40 and $5.55 a share.
“We expected 2Q to be weak and we did not downgrade VZ before the quarter because we felt it was already widely known the quarter would be weak,” he wrote. “We delayed. This was a mistake.”
Verizon didn’t immediately respond to a request for comment on the analyst note.
Barden noted Verizon lowered its guidance despite raising prices on some of its plans earlier this year. He said the company is suffering from rising inflation and the industry’s high level of smartphone subsidies to consumers.
“Verizon gambled again in the last several years that 5G [like 4G] would give birth to a similar degree of novel consumer and/or business demand,” he wrote. “It has not.”
Write to Tae Kim at [email protected]
