Dow component Verizon Communications Inc. (VZ) is trading higher after the company reported earnings per share (EPS) of $1.18, beating second quarter of 2020 estimates of$ 0.03. The income of 30.4 billion marked a 5.2% year-on-year decline but also exceeded the expectations that were adjusted downward due to the impact of the COVID-19 pandemic. The telecom giant has reaffirmed modest year 2020 forecasts of revenues, undermined by the significant decrease in wireless equipment revenue, due to “limited in-store engagement.”
- Verizon beat top and bottom line estimates.
- The stock has struggled to post gains since 2018.
- The high dividend yield has attracted income of research of the shareholders.
This traditional slow-mover has been running in place since the fourth quarter of 2018, spending most of the time, oscillating in the middle of$50. The beefy 4.40% before the dividend has helped shareholders to sleep at night, especially on the horizon 2020 pandemic-driven fluctuations. However, the accumulation has deteriorated in recent months, with investors rotating into growth plays, which has lost its value in the first quarter of decline. This could keep the pressure on Verizon stock for the rest of the year.
Wall Street currently rates Verizon as a “Moderate Buy”, on the basis of three “Buy” and seven “Hold” recommendations. None of the analysts recommend that shareholders sell their positions at this time, and hit the button. Price targets range from a low of $57 to a Street high of$ 70, while the stock is currently trading about $1 below the low of the target. This placement bodes well for a resumption of the increase in the median target of$61.
A price target is an analyst’s projection of the future security price. Price targets can cover all types of securities, complex investment products to shares and bonds. When setting a share price target, the analyst is trying to determine what the stock is a value and where the price will be in 12 or 18 months. In the end, the course objectives depend on the valuation of the company as of the issuance of shares.
Verizon Communications Long-Term Graph (2000 – 2020)
A multi-year uptrend recorded a record high of $64.75 in the fourth quarter of 1999 and made up of a complex of the downtrend which has found support in the middle of$20 in 2002. A rapid advance in the upper $30 stalled at the end of the year, settling at a resistance level that has finally started in the third quarter of 2007. The escape has failed, in January 2008, generating a decline that accelerated during the collapse of the economy before dropping back to a 16-year low in the bottom of $20.
The stock has completed a round trip into the record from 2007 to 2012 and has erupted, entering a good advance that the impasse in the middle of$50 in 2013. The price action has carved a series of nominally the highest since that time, up to 20 years to less than three points below that of 1999 of the resistance in December 2019. It fell to a 21-month low in March 2020 and has rebounded sharply, to settle in the middle of$50 in the third quarter.
Verizon Communications Short-Term Chart (2017 – 2020)
2018 purchase wave mounted the .786 Fibonacci retracement of nine years of decline, increasing the chances that the price would eventually finish at 100% retracement in the middle of$60. However, it was to test the .786 level for 21 months, grinding through a holding company, which shows no sign of yielding to a sustained trend, higher or lower. The stock is now set at the .50 retracement of the first quarter swoon, also indicating a balance between the bull and bear power.
The balance volume (OBV), the accumulation-distribution indicator published six years to the end of 2019 and entered into a distribution wave that reached the lowest since the month of August, 2018 in May. OBV has barely budged in the last two months, but on Friday, buy-the-news reaction could improve the weak sense, might generate a slight increase in the low – $60. Similarly, committed buyers need to open positions soon, or the risk of a gravity-driven recession.
On balance volume (OBV) is a technical trading momentum indicator that uses volume flow to predict changes in stock prices. Joseph Granville the first to develop the OBV tons in 1963 book Granville’s New Key to stock Market Profits.
The Bottom Line
Verizon stock is trading higher after the communications giant beat top-and bottom-line estimates in its latest earnings report, but the rising and falling of the potential of gaze limited at this time.
Disclosure: The author has held Verizon shares in a family account at the time of publication.