Verizon’s Turnaround Gains Traction: New Highs Are Likely in 2025

Key Points

• Verizon gains traction as its 5G and fiber optic networks take share and drive subscriber growth.
• Cash flow and capital return are critical details, including a high-yielding dividend and potential inclusion in the Dividend Aristocrats.
• Analysts see this stock rising at least 18% in 2025 and extending the trend into 2026.

After years of struggle, Verizon’s NYSE: VZ turnaround is gaining traction and driving shareholder value. Its push to build the most substantial 5G network in North America is paying off with increased share, penetration, and customer satisfaction, keeping it on track for sustained growth. Cash flow is another significant factor, improving sequentially and compared to the prior year, sufficient to enhance balance sheet health while reinvesting and paying dividends.

Among the critical takeaways for investors is that blue-chip, 5G industry-leading Verizon trades at less than half the valuation of the S&P 500, under 9x forward earnings, while yielding nearly 7% in early January. The value may not last much longer. 

Verizon Reports Beat-and-Raise Quarter for Q4 024

Verizon had a strong quarter in Q4 and in 2024, with revenue up 1.7% year-over-year (YoY) in the quarter and outpacing MarketBeat’s reported consensus by 100 basis points. The gain was driven by growth in equipment and services, led by a 40% sequential increase in equipment sales.

The business and consumer segments were also substantial, driving a 26% YoY increase in total subscribers to set a ten-year record. FIOS, the fixed product offering, is taking market share, with net additions up by 9% and total broadband up by 15%. 

Margin news is also good. The company’s core margin was better than expected and amplified by the one-off mark-to-market adjustments. The bottom line is that adjusted earnings are up by $0.02, about 1.85%,  with cash flow and FCF growing compared to the prior year. FCF approached $20 billion for the year, including the tower deal with Vertical Bridge. It added about $2 billion in cash for the year and is not expected to repeat for another decade. Regardless, adjusted FCF remains sufficient to maintain the capital return outlook, and the extra money was put to good use; reducing debt. 

Verizon reports a $8.5 billion sequential, $10.6 billion YoY debt reduction. This results in reduced leverage and improved earnings quality, which is critical given the dividend outlook, which includes a high yield in early 2025 and an expectation for growth.

Verizon has increased its distribution annually for 20 years and is on track for inclusion in the Dividend Aristocrat index. Inclusion in the index is a value driver for investors because it means increased ownership by all market segments: institutional, managed, and retail.

Verizon Issues Strong Guidance: Analysts See 18% Upside in 2025

Verizon issued strong guidance, affirming analysts' faith in a 2025 rebound. The guidance includes 2% to 2.8% revenue growth with steady to slightly improved margins. Earnings are expected to grow by 3%, producing another year of robust cash flow. Cash flow and FCF will contract YoY due to the tower deal in 2024 but grow at the core level. 

The guidance aligns with the analysts' outlook for increasing share price and may result in positive revisions. As it is, the analyst trends include firm sentiment pegged at Hold and a price target implying an 18% from critical support targets, but there is a bullish bias in the sentiment.

A recent upgrade and several price target revisions suggest this stock is a Strong Buy with a chance of reaching the high-end range between $50 and $55 by year’s end. A move to consensus is sufficient to put the stock at a multi-year high, confirm a reversal, and set the market on track for a sustained uptrend. 

The technical action is positive following the news. The market rose about 1% in pre-market trading the morning of the report and is confirming support at a critical level.

That level aligns with a previous support level and the mid-point of the established range, providing a strong signal for traders. If the market follows through on this signal, VZ shares should continue higher and retest the upper end of the range soon. The critical resistance points are near $42.50 and $45.