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Morgan Stanley Thinks Verizon Stock Is Pricey

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Verizon stock in 2018

Verizon (VZ) stock has seen a decent run-up in 2018—the stock has increased 8%. Although 8% looks like a small number, it’s a decent number in a matured sector like the US Telecom industry. In comparison, AT&T (T) stock has declined 20%. AT&T has been struggling in the past few years. AT&T has been making efforts to absorb two major acquisitions—DirecTV and Time Warner. AT&T spent $67 billion to acquire DirecTV and $85 billion to acquire Time Warner.

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According to the latest report from CNBC, Morgan Stanley downgraded Verizon shares from “overweight” to “equal weight.” The report said, “For 2019 we expect Verizon to report just 1% EPS growth … on broadly flat revenues.” Morgan Stanley thinks that Verizon is making a significant investment in 5G technology, which limits its EPS growth. Regarding flattish revenue growth, Morgan Stanley said, “We expect limited 5G Home revenues in 2019 as Verizon awaits standards based equipment around the middle of the year.”

Telecom companies are focusing on bringing 5G technology service sooner. Verizon launched its first commercial 5G service in four cities in October. AT&T announced that it’s set to launch its 5G service in 2018 across at least 12 cities. T-Mobile (TMUS), which is in the process of merging with Sprint (S), also promised to bring 5G technology to its network sooner.

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