4) Verizon Communications Inc. (NYSE:VZ)
Forward P/E Ratio as of 8 November: 8.55x
Number of Hedge Fund Holders: 67
Verizon Communications Inc. (NYSE:VZ) is engaged in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities.
Verizon Communications Inc. (NYSE:VZ) continues to pursue several strategic initiatives in a bid to strengthen its market position and fuel future growth. For example, Wall Street remains optimistic about the company’s potential acquisition of Frontier Communications. This acquisition should expand Verizon Communications Inc. (NYSE:VZ)’s fiber access footprint and potentially improve its competitive position in the convergence space. Furthermore, its focus on Fixed Wireless Access (FWA) offerings should translate into a key driver of future revenue growth.
Talking about Verizon Communications Inc. (NYSE:VZ)’s broadband strategy, the company plans to double its fixed wireless subscribers to 8 million – 9 million by 2028 and further expand its fiber network to 35-40 million passings. Furthermore, the company continues to focus on increasing its Fios builds and plans to integrate Frontier’s fiber network into its operations. This will further enhance broadband access and coverage.
Verizon Communications Inc. (NYSE:VZ)’s ambitious fiber expansion strategy possesses the potential to enable significant long-term growth for the company. Wall Street believes that fiber infrastructure offers a competitive advantage in providing high-speed internet services, that are essential for both residential and business customers. This expansion is expected to result in increased revenue streams, improvement in customer retention, and opportunities for bundling services.
Moreover, a strong fiber network lays the groundwork for future technologies and services. This will open up new markets and revenue opportunities across areas including smart cities, IoT, and edge computing. Third Point Management, a New York-based investment advisor, released its Q3 2024 investor letter. Here is what the fund said:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
