DVD (@deepvaluedude): Verizon Investment Case

AI Summary

The author rates Verizon Buy with a ~$72 two-year price target, citing CEO Dan Schulman's turnaround, Frontier integration, subscriber acceleration, AST SpaceMobile partnership, FCF and capital returns, and rate-driven multiple expansion.

VZ — LONG The author rates Verizon Buy with a 2-year price target of ~$72, arguing the market has not yet fully priced the medium-term earnings power and free cash flow generation potential of the combined entity after the $20B Frontier Communications acquisition. Catalysts include CEO Dan Schulman's operational overhaul with 13,000 job cuts, 616,000 Q4 2025 postpaid phone net adds with FY2026 guidance of 750K–1M, the AST SpaceMobile satellite partnership, FY2026E FCF of $21.5B+ enabling a new $25B buyback, and a 5.8% dividend yield. The author's valuation path to $62–$72 by 2028 assumes Fed funds fall to 2.0–2.5%, compressing WACC and expanding the P/E from 10.0x forward.

Under our rate scenario (Fed funds to 2.0–2.5% by 2028), WACC compression, yield-spread normalization, and P/E expansion create a path to $62–$72 per share (24-month total return of 39–59%).

Score 2

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…. For entire thesis and valuation models, visit the X link 🔗 to read. Below is just the key takeaways.

Rating: Buy 

Current Price: $49

2 year PT: \~$72

I. Executive Summary

Verizon is at a genuine strategic inflection point. Under new CEO Dan Schulman (appointed October 2025), the company has initiated a comprehensive operational overhaul, cutting 13,000 positions, abandoning unprofitable price-increase-driven growth, and completing the transformative $20 billion all-cash acquisition of Frontier Communications on January 20, 2026. The stock has responded favorably, rising from a 52-week low of $38.39 to approximately $49 today, but I believe the market has not yet fully priced in the medium-term earnings power and free cash flow generation potential of the combined entity.

The thesis rests on five pillars:

1. Frontier Integration Unlocks Convergence Value: Verizon now passes \~30 million fiber premises across 31 states, enabling a nationwide convergence strategy (mobile + home internet bundles) that reduces churn by \~50% for converged customers. Run-rate cost synergies have been doubled to $1B+ by 2028.

2. Subscriber Momentum is Inflecting: Q4 2025 delivered 616,000 postpaid phone net adds, highest since 2019, and management is guiding 750K–1M for FY2026, a 2–3x acceleration.

3. AST SpaceMobile Satellite Partnership, Under-Appreciated Upside: The definitive commercial agreement with AST SpaceMobile to provide direct-to-cellular broadband via satellite fills coverage gaps, with cumulative partnership value of $3.0–$11.4B through 2030 via churn reduction (3–9 bps), combined tower savings of $590M–$2.2B (new build avoidance plus existing lease decommissioning), and D2D revenue share ($300M–$1.05B). Verizon’s asset-light model (zero owned towers post-Vertical Bridge sale) uniquely enables rural site rationalization.

4. FCF Machine with Capital Return Inflection: FY2026E FCF of $21.5B+ (7% growth) enables a new $25B share repurchase authorization alongside a 5.8% dividend yield and continued deleveraging.

5. Valuation Remains Undemanding + Macro Tailwind: At 10.0x forward P/E and a \~5.8% dividend yield, the stock is priced for stagnation. Under our rate scenario (Fed funds to 2.0–2.5% by 2028), WACC compression, yield-spread normalization, and P/E expansion create a path to $62–$72 per share (24-month total return of 39–59%). This is among the most asymmetric risk/reward profiles in large-cap equities.

Ideas

u/deepvaluedude Reddit r/ValueInvesting

Buy Verizon: turnaround, Frontier, FCF, and rate-driven re-rating

The author rates Verizon Buy with a 2-year price target of ~$72, arguing the market has not yet fully priced the medium-term earnings power and free cash flow generation potential of the combined entity after the $20B Frontier Communications acquisition. Catalysts include CEO Dan Schulman's operational overhaul with 13,000 job cuts, 616,000 Q4 2025 postpaid phone net adds with FY2026 guidance of 750K–1M, the AST SpaceMobile satellite partnership, FY2026E FCF of $21.5B+ enabling a new $25B buyback, and a 5.8% dividend yield. The author's valuation path to $62–$72 by 2028 assumes Fed funds fall to 2.0–2.5%, compressing WACC and expanding the P/E from 10.0x forward.

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Ideas

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