Morgan Stanley resumes coverage on Verizon and Frontier with a neutral view

Morgan Stanley on Thursday resumed their coverage on Verizon (NYSE:VZ) and Frontier Communications (NASDAQ:FYBR) with an investment rating of “equal weight.”

Analysts led by Benjamin Swinburne wrote that Verizon’s rating reflects a balanced view of the stock’s attractive valuation and upside to FCF from bonus depreciation against a modest EBITDA growth outlook and risk to consumer wireless net adds expectations.

MS believes Verizon has a clear strategy to continue to improve its performance in consumer wireless and expects the pace of market share losses to slow in the coming years. However, it noted that trends in 2025 appear more challenging.

They forecast Verizon will deliver on its guidance for higher consumer postpaid net additions in 2025 vs. 2024, but with a very slim margin of error (87k in ’25 vs. 82k in ’24).

“When we aggregate our view on moderating industry growth, Verizon’s pricing premium, the competitive environment, and Verizon’s strategy to improve its wireless performance, we see 2.5-3% annual wireless service revenue growth ahead with a bull case of ~3-4% and a bear case of ~2% in each of the next three years,” the research firm said in its July 10 note.

MS believes post-closing of the Frontier transaction, Verizon will look to build quickly to reach 35M fiber passings by 2030 and aim for the upper end of its 35-40M fiber passings guidance over time.

VZ has a price target of $47, implying an upside of 12.1%. FYBR has a PT of $38.50, a 5.3% upside.