Verizon Slips After Citi Downgrade On Spectrum Prices, Rising Competition

NEW YORK (TheStreet) -- Shares of Verizon (VZ) are falling in early trading after Citigroup downgraded the stock to Neutral from Buy in a note to investors today.

WHAT'S NEW: Citigroup analyst Michael Rollins downgraded Verizon, citing the higher than expected price the company will have to pay for wireless spectrum and the increased price competition it is facing. Prices for spectrum currently being auctioned by the FCC are running 36% above Rollins' estimates, the analyst wrote. The higher than expected cost of spectrum implies that the wireless carriers will have higher costs, the analyst explained. Meanwhile, increased competition over consumer prices among the carriers could prevent them from profiting from increased data consumption, Rollins believes. National wireless carriers' outlook for 2015 is unfavorable, warned the analyst, who trimmed his price target on Verizon to $51 from $53.

WHAT'S NOTABLE: The total provision winning bids in the AWS-3 auction rose to about $33B after round 26, which was up 3.23% from the prior round, according to data posted to the FCC website on Friday. Companies believed to be bidding in the auction other than Verizon include AT&T (T) , T-Mobile (TMUS) and U.S. Cellular (USM) . This morning, RBC Capital raised its price target on DISH to $81 from $69, citing the current price points of a spectrum auction. The firm views the price points as a conservative valuation proxy for DISH's AWS-4 spectrum holdings. Analysts at Goldman also raised DISH's price target to $96 from $77 to reflect a higher value for the company's spectrum holdings.

PRICE ACTION: In early trading, Verizon fell 2.2% to $49.12, while DISH Network shares rose 3% to $75.86.

Reporting by Larry Ramer.

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