Verizon & AT&T Slid On Analyst’s Comment (VZ, T, LEAP)
Shares of communications services providers fell on Wednesday after analyst at RBC Capital reduced their growth target on the couple of large cap stocks within the sector, citing lower margins.
Verizon Communications Inc. (NYSE:VZ) was downgraded by the firm to a sector perform, or neutral and maintained its price target of $40 on the stock. The firm sees “few sustainable catalysts given a flatter postpaid growth trajectory and a weaker starting point for 2012 wireline margins.”
The firm reduces its estimates for post-paid wireless subscriber growth on a net basis by more than 30% — to 522,000 net new subscribers for the first quarter. He said “slowing post-paid growth reflects a combination of maturing industry penetration and more iPhone-enabled competitors.”
AT&T Inc. (NYSE:T) shares also fell 1.23% to $31.25. Analyst at RBC Capital maintained their sector perform rating on the stock with a price target of $30. The firm cut post-paid net additions for AT&T by 32% for the quarter, to 170,000, citing the same factors.
Shares of other companies also fell including Leap Wireless International, Inc. (NASDAQ:LEAP), which slid 2.80% to $9.03 after analyst at Barclays lifted their price target on the stock by $2 to $13 and maintained their Equalweight’ rating.
Analyst, James M. Ratcliffe, said, “In light of better than expected churn guidance and the CLWR wholesale announcement, which is expected to reduce capex requirements for an LTE buildout, we are raising our price target, but maintaining our EW rating, as rising gas prices could disproportionately impact LEAP’s subscriber base.” (Barclays lowers Q1/FY12 churn to 3.1/3.4% and raises net additions to 310k/576k)