NEW YORK (TheStreet) -- Shares of Verizon Communications Inc (VZ) are sliding, down 1.6% to $48.29 in early market trading Thursday, after the company was downgraded to "neutral" from "overweight" by analysts at JPMorgan Chase earlier this morning.
The firm cited a lack of significant near-term catalysts, along with its belief that benefits from its AOL (AOL) acquisition may take a few years to materialize.
The firm also upgraded shares of AT&T to "overweight" from "neutral" this morning.
New York City-based Verizon is a holding company that is engaged in delivering broadband and other wireless and wire-line communications services to consumer, business, government, and wholesale customers.
Separately, TheStreet Ratings team rates VERIZON COMMUNICATIONS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate VERIZON COMMUNICATIONS INC (VZ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VZ's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Telecommunication Services industry average. The net income increased by 6.9% when compared to the same quarter one year prior, going from $3,947.00 million to $4,219.00 million.
- Net operating cash flow has increased to $10,169.00 million or 42.44% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.82%.
- The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 62.18%. Regardless of VZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VZ's net profit margin of 13.19% compares favorably to the industry average.
- VERIZON COMMUNICATIONS INC's earnings per share declined by 11.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC reported lower earnings of $2.51 versus $4.00 in the prior year. This year, the market expects an improvement in earnings ($3.85 versus $2.51).
- You can view the full analysis from the report here: VZ Ratings Report