Verizon Stock Eyes Ceiling as Earnings Loom

Verizon's first-quarter report is due out Friday

Assistant Editor
Apr 23, 2020 at 8:04 AM
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Shares of Verizon Communications Inc (NYSE:VZ) have distanced themselves from their late-March sell-off, and are now up 15.6% for the month. At last check, VZ is up 2.2% trading at $58.05 due in part to an long-term agreement the company came to with Clearway Energy (CWEN) in which the two companies will finance the construction of new wind and solar farms. This new deal comes just ahead of Verizon’s first-quarter earnings report, which is due out before the open on Friday. Below, we'll dig into how VZ has been after past quarterly reports.

Despite it's recent rally, VZ has spent April consolidating below its 200-day moving average. Nevertheless, Verizon stock has added 19% since its March 25 annual low of $48.84

VZ Chart April 22

Analysts are content to sit the sidelines with VZ stock. Of the 15 brokerages covering the security, nine sport a tepid “hold.” Echoing this is the consensus 12-month target price of $59.88 which is a small 3.2% and a level Verizon last reached on February 11.

In the options pits, Verizon's 10-day call/put volume ratio of 3.44 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 65th percentile of readings from the past 12 months, suggesting a healthier-than-usual appetite for long calls is as of late.

Looking back, the stock has seen mostly negative or muted returns following its earnings reports the past two years. In fact, five of the last eight next-day sessions were negative for Verizon stock. It is worth noting, however, that the largest downward swing the equity experienced was -3.3% in January of 2019. The security averaged a 1.7% swing, regardless of direction, the day after its last eight reports. This time around, the options pits are pricing in a 3.8% shift, regardless of direction. 

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