Shares of Verizon (NYSE:VZ) fell on Monday following a downgrade from Citi citing potential lower wireless pricing in the future.
Citi downgraded the stock to neutral from buy and maintained its $62 price target.
Said Citi analyst Michael Rollins, "Verizon’s consistently strong operating performance in the wireless category may not be enough to drive further multiple expansion at a time when investors are more likely to question the competitive environment and long-term risks to pricing and margins."
The wireless carrier space is narrowing with a potential merger between T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) on the horizon. As new competitors come into the space without legacy pricing and with different margin goals, opportunities to expand margins are shrinking for Verizon, said Rollins.
A merger between T-Mobile and Sprint "creates a potentially disruptive fourth competitor [that] could be dilutive to long-term pricing and margins for the wireless industry," said Rollins.
Despite the downgrade, Citi said it is not concerned about Verizon’s upcoming quarterly results.
Shares of Verizon are only up 3% since the start of the year, while T-Mobile, Sprint and AT&T are all up about 20% year to date.
In late June, Verizon announced plans to offer its customers who are Veterans unlimited access to the U.S. Department of Veteran Affairs (VA) VA Video Connect telehealth app. Veterans will be able to access the application anywhere across Verizon’s nationwide 4G LTE network, without charge.
VA Video Connect uses smartphone or tablet cameras to let Veterans talk and interact with their VA care team over a live, encrypted video stream. Accessing VA Video Connect is easy; for iOS devices, VA Video Connect is available at the Apple App Store. For all other devices, a tele-health session launches automatically after a Veteran user selects an emailed session.
Verizon shares docked 11 cents to $52.80
