Underperforming Verizon Stock Just Landed a 'Buy' Rating

Now looks to be an attractive time to buy VZ options

Managing Editor
Jun 19, 2018 at 9:40 AM
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Shares of Verizon Communications Inc. (NYSE:VZ) are up 0.4% at $47.65 in early trading, after receiving an upgrade to "buy" from "hold" at Deutsche Bank, which maintained its $56 price target. The firm expects revenue growth to normalize in the second quarter amid more stable pricing conditions in the industry. The analyst also sees a positive outcome from the shift to 5G and the telecom's advertising investments.

Verizon stock has been on a sideways run since February, struggling to overcome the 200-day moving average. The equity was down 10.3% year-to-date coming into today, but analyst attention toward the blue chip had been mostly optimistic, with 10 of the 19 firms sporting "buy" or better recommendations. Then there's VZ's average 12-month price target of $55.68, which stands at a roughly 17% premium to current levels. 

The equity's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.46, ranking in the 1st percentile of its annual range. This low ranking suggests that speculators targeting option contracts expiring within three months are unusually call-skewed at the moment. 

Lastly, now may be a good time to target near-term Verizon options. The cellular service concern's Schaeffer's Volatility Index (SVI) is just 17%, ranking in the 21st percentile of its annual range -- meaning there are lower-than-normal volatility expectations priced into short-term options at the moment. 

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