Verizon Banks on Subscription Growth

Verizon's stock could move higher if it can increase its mobile phone subscriptions at the expense of its rivals.
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Mobile Phones & Plans constitute around 50% of the $34 Trefis price estimate for

Verizon

's

(VZ) - Get Report

(NYSE:VZ) stock, which is currently about 8% above the current market price of $31.

There could be additional upside to Verizon if the company is able to gain subscriber share from rivals

Sprint Nextel

(S) - Get Report

and

AT&T

(T) - Get Report

.

We estimate that Verizon's market share in U.S. monthly mobile subscribers has increased from around 23.5% in 2005 to around 30% in 2009. Verizon's subscribers typically include retail customers opting for postpaid plans that come with a 1- to 2-year contract.

The acquisition of Alltel in January 2009 will help Verizon expand its network coverage to most parts of the U.S. We expect that Verizon will continue to gain share as its smartphone portfolio improves and as subscribers continue to transition from feature phones to smartphones. The eventual end of AT&T's iPhone exclusivity is also expected to benefit Verizon share.

The average of Trefis member forecasts for Verizon share of monthly mobile subscribers indicate an increase from 33.5% in 2010 to around 40% by 2016, compared to the baseline Trefis estimate of an increase from 31% in 2010 to close to 35% by the end of the Trefis forecast period. The member estimates imply an upside of 6% to the Trefis price estimate for Verizon's stock.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Verizon's stock to Verizon's share of monthly mobile sSubscribers.

Our complete analysis for Verizon's stock is

here

.

Trefis

is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the U.S.