New Street Sees Problems Ahead for Verizon

New Street cut growth estimates for Verizon Monday, saying “guidance for medium-term growth of 3-4% looks increasingly out of reach” after last week’s Q2 report (see 2207220061). “Verizon is in a difficult position, in large part due to their past success,” wrote analyst Jonathan Chaplin: “Market share of close to 40% will be tough to defend in a market with four well-resourced competitors. The Company’s position is made more untenable by the fact that they are priced at a substantial premium and the network differentiation that justified that premium in the past is waning. Verizon’s pricing will be still more difficult to sustain if we enter recession.” Chaplin said Verizon invested in promotions during Q2, which failed to “stem the loss of subscribers”, then raised prices for some customers “which will only widen the gap in value with T-Mobile and Cable, the two most prominent challengers.”