Verizon Communications Inc (VZ)

[cintrix]

Verizon Downgraded On Valuation, Uncertainty Over Yahoo, iPhone 7

Oppenheimer & Co. downgraded Verizon Communications (VZ) stock on a number of factors, including valuation, uncertainty over its possible acquisition of Yahoo (YHOO), wireless revenue growth and the outcome of a radio spectrum auction.

In addition, Apple's (AAPL) expected rollout of the iPhone 7 this fall could pressure wireless profit margins, said Oppenheimer analyst Tim Horan.

Verizon stock has run up more than 20% in 2016, while AT&T (T) stock has gained 24%, amid growing investor demand for dividend-paying stocks as global interest rates remain historically low.

Horan, though, downgraded Verizon stock to perform because of the issues cited.

"We remain optimistic on long-term wireless and fiber fundamentals, but the stock is now $2 above our prior price target and is trading at relative highs on several metrics," Horan said in the report.

AT&T is due to report Q2 earnings on Thursday, while Verizon's results are slated for next Tuesday.

Verizon stock was down a fraction, near 55.60, in afternoon trading in the stock market today. Verizon is in still in range from a 54.49 buy point.

AT&T stock fell slightly, below 43. AT&T is still slightly extended from an early June breakout. Investors should avoid chasing stocks too far past proper buy points to reduce the risk of significant stock losses.

How much wireless firms will spend in an auction of airwaves now used by local TV broadcasters has been a concern to Wall Street analysts. T-Mobile US (TMUS) is also bidding, while Sprint (S) is not taking part in the auction.

Verizon has been viewed as the front-runner to acquire web portal Yahoo's internet and advertising business. According to reports, AT&T also made an offer in the final round of bidding.

"Verizon's acknowledged interest in Yahoo's assets and the broadcast incentive auction in particular as well as a change in FCC leadership have historically pressured wireless stocks, as have the two-year (Apple) iPhone refresh," added Horan. "We believe a clear path to wireless revenue growth in second half 2017 is key."http://www.investors.com/news/technology/verizon-downgraded-on-valuation-uncertainty-over-yahoo-iphone-7/?yptr=yahoo