Verizon Communications Inc.

Verizon Communications Inc (NYSE: VZ) core business primarily revolves around wireless services, accounting for approximately 80% of its revenue and nearly all its operating income. It is the largest wireless carrier in the United States, catering to approximately 93 million postpaid and 24 million prepaid phone customers (after acquiring Tracfone) through its extensive nationwide network. In addition to its wireless operations, Verizon also maintains fixed-line telecom services, which encompass local networks in the Northeast, serving approximately 25 million households and businesses, along with offering nationwide enterprise services.

Recent Financial and Business Updates:

• Second Quarter Income Statement Review:
  • Earnings per share (EPS) for this quarter were USD 1.10, which is lower than the USD 1.24 in the second quarter of 2022. When excluding special items, the adjusted EPS was USD1.21, compared to USD 1.31 in the second quarter of 2022.
  • The total operating revenue amounted to USD 32.6 billion, marking a 3.5 percent decrease from the second quarter of 2022.
  • Cash flow from operations in the first half of 2023 was USD 18.0 billion, showing an increase from USD 17.7 billion in the first half of 2022.
  • Net income for this quarter was USD 4.8 billion, reflecting a 10.3 percent decrease from the second quarter of 2022.
  • Consolidated adjusted EBITDA reached USD 12.0 billion, representing a year-over-year increase of 0.8 percent.
• Balance Sheet Review:
  • As of the conclusion of the second quarter in 2023, Verizon saw a sequential reduction in its unsecured debt, which decreased by USD 662 million, reaching a total of USD 131.4 billion.
  • Total assets were USD 379.955 billion as of June 30, 2023.
  • The company's net unsecured debt balance displayed an improvement, increasing by USD 3.2 billion to USD 126.6 billion.
  • By the end of the second quarter in 2023, Verizon's unsecured debt was around 6.1 times its net income (on a last twelve month basis), and its net unsecured debt was approximately 2.6 times its adjusted EBITDA.
• New Online Education Platform Update:
  • Verizon has unveiled a fresh online education platform in collaboration with edX, a prominent global online learning platform under 2U, Inc.
  • The aim is to aid in the upskilling and reskilling of individuals for the most rapidly growing job opportunities in the present day.
  • Recent research indicates that a significant portion of the workforce lacks the essential digital skills needed for today's employment landscape.
  • Verizon Skill Forward, initially introduced in 2020, will harness Verizon's new strategic alliance with edX to provide tuition-free educational paths in technical and professional fields that are currently in high demand.
  • Verizon will bear the cost for learners participating in these programs.
• Partnership Update:
  • CASETiFY, the worldwide tech accessory brand, revealed its inaugural retail collaborations with Verizon, marking its debut with the company both in physical store locations and on the internet.
  • This expansion into retail channels makes the brand's most popular iPhone accessories available in more than 500 outlets across the United States.s
• Expansion of Total by Verizon:
  • Verizon's new prepaid wireless brand, which operates on America's most dependable 5G network, has revealed its plan to achieve a significant goal.
  • By the end of September, it will have established 50 locations in the greater Los Angeles area, as a pivotal element of its ambitious retail expansion strategy in Southern California and across the nation.
• Dividend Update:
  • The Board of Directors of Verizon announced a quarterly dividend of 66.50 cents for each outstanding share, reflecting an uptick of 1.25 cents per share compared to the previous quarter.
  • Shareholders of Verizon on record as of the close of business on October 10, 2023, will receive this quarterly dividend on November 1, 2023.
  • This marks the 17th consecutive year that Verizon's Board has sanctioned an increase in its quarterly dividend.

Technical Observation (on the daily chart)

The stock hit its lowest point in the past 52 weeks, reaching USD 30.14 on October 06, 2023. The Relative Strength Index (RSI) observed over a 14-day period registers at 36.71, indicating a recovery from oversold conditions and finding support around the 30 level. This suggests the potential for a short-term uptick in momentum or a period of consolidation. Furthermore, the stock's current position is situated below both the 21-day Simple Moving Average (SMA) and the 50-day SMA, potentially acting as dynamic short-term resistance levels. Currently, the stock price appears to be forming a double bottom pattern within the range of USD 30 to USD 31, with expectations of a notable upward surge once it breaches the USD 32 to USD 33 levels on the upside.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 16, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.