This article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

Verizon Stock Forecast

Summary

Verizon (VZ) Stock Analysis

I Know First Algorithm Bullish Forecast For VZ

Verizon (VZ) Stock Analysis

Verizon Communications Inc. (Verizon), incorporated on October 7, 1983, is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment services and products to consumers, businesses and governmental agencies. The Firm offers voice, data and video services and solutions on its wireless and wireline networks. The Company’s divisions include Wireless and Wireline. The Wireless segment offers communications services and products, including wireless voice and data services and equipment sales that are provided to consumer, business and government clients across the United States. The Wireline segment offers voice, data and video communications services and products, such as broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services, and local and long distance voice services. The Firm provides these services and products to clients in the United States, as well as to carriers, businesses and government clients both in the United States and around the world.

Verizon is set to release its quarterly earnings on January 24, 2017. It is predicted that VZ will be up $0.90 EPS which is up 1.12% from its last years EPS of $0.89. The profit if reached will be $3.69 billion for the cell phone provider. Last quarter VZ reported an EPS of $1.01. Currently, 17 analysts have been covering VZ and out of those 17, 5 gave VZ a buy rating, 0 analysts gave it a sell rating and 12 analysts gave VZ a hold rating.

It is projected that Verizon price per share may range from a low of $44 and a high of $55 with an average of $51.39. As it currently stands, VZ’s share price is $53.38, down from is previous close of $53.74. In VZ’s Q3 earnings report, the company brought in $22.1 billion in revenue, compared to Q2 with 21.7 billion in revenue. However, there is a 55.56% chance that VZ revenue will go down in Q4 compared to Q3. In the last 27 quarters, VZ equity price has gone down in 15 quarter. In the last 3 years, the earnings per share have gone up 66%, above estimations. In the last year, there was an earnings surprise of 1.06%.

Verizon and its rival, AT&T plan to release 5G technology within their broadband Internet. The new 5G technology will be able to deliver 10 times faster data to smartphones compared to the 4G. The delay on data will only be 1 millisecond. Though the release will be this year, it will only be to certain households and businesses with a true release in 2020. By that time, carriers and the government will have invested $5 billion into the 5G technology development. The network being released will use millimeter waves for 5G, millimeter waves are “waves transmitted at frequencies between 30 and 300 gigahertz, and they are between 1 and 10 millimeters in length These waves are much smaller than the ones used for 4G, the signals used for 4G is between 1 and 10 millimeters in length, with frequencies below 6 GHz. For the 5G network, carriers are turning their attention to 26 GHz waves, as well as a 15 GHz wave that will be tested in Austin, Texas.

There are problems with achieving true 5G. Fixed Wireless Systems used by carriers send beams to connect to devices from a stationary point. The carriers have to run Ethernet cables from the stationary point, which could be from an antenna, to deliver the 5G Internet to stationary buildings. This is not a problem, however if the user is moving, whether it be walking or in a moving vehicle, it’s not as simple as using Ethernet cables. Carriers are turning their attention to autonomous cars, connected appliances and robots in order to overcome the current issue with 5G. Another problem with the millimeter wave is that it isn’t able to move through buildings because it is easily absorbed into water and oxygen molecules present in the air. To overcome this problem, the signal has to use more power than 4G just to be received on the users end. Another issue is that other companies may come out with technology that is better than the millimeter wave in a quicker timetable than the release in 2020, which would be a huge loss of investment.

Verizon is also moving forward with acquisition of Yahoo Inc. despite recent data breaches that have impacted millions of Yahoo’s customers. The reason that Verizon doesn’t seemed phased about this problem is that hackers are common in the corporate world and will continue to happen, even as Internet security continues to strengthen.

Large companies that have been affected by hackers include Sony, Target, The Home Depot, JPMorgan Chase, Anthem, and Cisco. Just this year, the US as a whole has seen about 1,000 data breaches. In other words, hackers could set their sights on any company at any time, and more likely than not, they will break through security. Continuing to build security and moving on is the only way to overcome such data breaches.

Verizon can also be compared to other carriers, other than AT&T. T-Mobile has been climbing in the same market. T-Mobile has provided amazing deals, such as the no-contract plans. These plans are just that, without contracts, tying customers to a 2-year contract. The premise is that T-Mobile shows their users that they’re services trump other providers and customers can leave without penalty at any time. However, this promotion has caught on and Verizon and AT&T have begun offering similar deals. Therefore, Verizon is still the leader in providers and will continue to be in the future.

I Know First Algorithm Bullish Forecast For VZ

I Know First currently maintains a bullish stance on VZ with signal strength 38.04 and predictability 0.46 for 1 year forecast.

In the past I Know First was also bullish on VZ. This bullish forecast on VZ was sent to current I Know First subscribers on June 15, 2015, where VZ had a signal of 28.76 and a predictability of 0.31. VZ showed returns of 18% for one year.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Conclusion

Verizon has a lot in store for consumers in the new year, with acquisition of Yahoo and their soft release of the 5G network. There is much room for growth for these reasons as well as continual release of new and intriguing cell phones that ultimately boost their revenue.