The beginning of the year has been bustling on Wall Street, with an influx of stock upgrades and downgrades. This flurry of street-notes has set the tone for the early 2024 market activity, particularly for companies like Apple and Moderna. Additionally, Verizon Communications seems to be enjoying a boost to start the new year, courtesy of Wall Street.
Verizon Communications: Upgraded Outlook
KeyBanc Capital Markets has upgraded its rating on shares of Verizon Communications, moving it from Sector Weight to Overweight. In a note released on Tuesday, KeyBanc highlighted the company’s favorable position in the wireless industry for 2024. As a result, the stock experienced a 3.1% surge on Tuesday and is anticipated to rise by another 1% at market open on Wednesday. KeyBanc’s price target for Verizon is $45, suggesting a potential 16% increase from Tuesday’s closing price.
The note from KeyBanc is aptly titled ‘New Year, New Verizon’, capturing the positive start that the company has had in 2024. In contrast to its 4% decline in 2023, Verizon is on track to recover a significant portion of its losses within the first two trading days of the new year.
Changing Tides in the Market
Early on, there is already a shift in fortunes taking place — an intriguing theme for the year ahead. Two notable examples are Moderna and Apple. Moderna, which had the poorest performance in the S&P 500 in 2023, experienced a notable boost of 13% on January 2nd following an upgrade from Oppenheimer.
On the other hand, Apple, which saw impressive growth of nearly 50% in the previous year, witnessed a drop of 3.6% on January 2nd, reaching a seven-week low. This decline came after Barclays downgraded the tech giant’s shares from Equal Weight to Underweight.
Verizon Expected to Have a Strong 2024
KeyBanc analysts are optimistic about Verizon’s prospects for 2024, as they anticipate it to be one of the best years in recent history for the telecommunications giant. Led by Brandon Nispel, the analysts expect Verizon’s earnings before interest, taxes, depreciation, and amortization (EBITDA) growth rate to surpass 2% in 2024, a significant improvement from last year when it remained flat. This projected growth rate would be Verizon’s second-fastest since 2018.
One notable aspect mentioned by the analysts is that Verizon currently trades at historically low levels. With a forward enterprise value-to-EBITDA ratio of 6.25 times, compared to its three-year average of 6.9 times, there is potential for further valuation growth.
The unwillingness of wireless carriers to disrupt the current market dynamics further contributes to KeyBanc analysts’ interest in increasing their wireless exposure. As companies appear complacent with their performance and reluctant to take risks, the opportunity for growth becomes even more appealing.
It is worth noting that T-Mobile US stock showed a slight increase of 0.3% in premarket trading on Wednesday, while shares of AT&T rose by 0.1%.
