Skip to Content
Stock Analyst Update

Verizon Starts 2021 With a Yawn

We're not changing our $57 fair value estimate.

Mentioned: , ,

Verizon’s (VZ) start to 2021 was in line with our expectation that it will see only modest wireless customer growth during the year, with a nice increase in revenue per customer. The FiOS business looks to finally be building momentum, posting a third consecutive quarter of solid customer growth. While FiOS is a small part of Verizon’s total revenue, we view its fiber network as a key strategic asset. Free cash flow was also very strong during the quarter, though the spending needed to deploy C-band spectrum has yet to commence. Our $57 fair value estimate is unchanged, and we view Verizon shares as fairly valued.

Verizon’s less aggressive stance in the wireless market versus AT&T (T) and T-Mobile (TMUS) showed clearly in gross postpaid wireless phone customer additions, which dropped about 6% year over year during the first quarter, despite lapping the onset of the pandemic. Verizon’s characteristically loyal customer base remains firmly in place, with churn metrics modestly better than a year ago. The firm lost 178,000 net postpaid wireless phone customers during the quarter, worse than 68,000 lost a year ago, but underlying trends are more favorable than these numbers indicate. The year-ago number includes a quick ramp in business customers taking service to handle remote work and school. The first quarter is also typically the weakest of the year for Verizon, and its postpaid phone customer base remains 0.6% larger than a year ago. Wireless services revenue increased 2.4% year over year, the fastest pace since 2019, with revenue per postpaid account up 2.1%.

Residential fixed-line revenue grew 0.7% versus a year ago, the first increase in at least two years, with 66,000 net broadband customer additions during the quarter. After years of treading water, Verizon’s broadband customer base has grown nearly 4% over the past year. The firm continues to lose television customers at a steady clip owing to industry pressure and the decision to deemphasize this low-margin service.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Michael Hodel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.