Verizon Is Nomura's Top Pick Thanks to Wireless Operation Domination

Verizon Communications Inc. (VZ) is still the top player in telecommunications, according to analysts at Nomura who maintained their "buy" rating and $65 price target on the company in a note Thursday, Oct. 4. 

Nomura analyst Jeffrey Kvaal said he expects the company to report above-consensus postpaid phone net adds when Verizon reports its third-quarter results on Oct. 23. However, Nomura expects the company's churn rate, which had been at record low levels, to rise slightly due to increased competition from rival T-Mobile Inc. (TMUS) .

"We expect Verizon to report postpaid phone net adds slightly above consensus of 150K driven by strong gross adds. We attribute the gross add performance to the ongoing trend of pre-to-postpaid migrations as well as weakness at Sprint (S) , which recently indicated it would report a net loss in postpaid phone subscribers for the quarter," Kvaal wrote. 

As for the churn rate, or the percentage rate that customers end their subscriptions, Nomura expects Verizon to report a churn of 1%, an increase of 3 basis points year over year. 

"We note, however, we still expect Verizon to report industry low postpaid and postpaid phone churn for the quarter," Kvaal said. 

Shares of Verizon were down 0.5% on Thursday.

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