Verizon Communications Inc. continued to show stability in its wireless business despite generous iPhone promotions across the industry, but the company’s latest results only tell so much.
That outlook “supports a view that ARPU [average revenue per user] trends are improving, typically a harbinger of better equity valuations,” wrote MoffettNathanson analyst Craig Moffett, who has a buy rating and $66 target price on the stock. Many analysts estimate that Verizon spent in the realm of $40 billion to obtain spectrum through the recent auction, a move viewed as necessary for the company’s network positioning but damaging to its balance sheet. Before the auction began, some expected that Verizon might only have to spend roughly half that sum to get the spectrum it needed, but the auction drew heavy bidding activity that pushed up prices.
He noted that the company’s 2021 capital-spending forecast called for $17.5 billion to $18.5 billion, which was below his own expectation for $18.7 billion. The company experienced wireless service revenue growth but saw lower wireless equipment revenue and declines in its legacy wireline products.
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