Verizon Communications

VZ : NYSE : US$48.04

Target: US$55.00

Verizon Communications is a leading provider of
communications, information and entertainment
products and services to consumers, businesses and
governmental agencies. Formerly known as Bell Atlantic
Corporation, the company offers both wireless and
wireline products and services. The company is
headquartered in New York, New York.
All amounts in US$ unless otherwise noted.

Investment recommendation
We are adjusting our estimates to account for the closing of the
Vodafone/Verizon Wireless transaction earlier than we had
assumed in our initial model. We maintain our BUY rating and
$55 price target which implies 7.0x 2015 adjusted EBITDA (pro
forma for VOD buyout of VZW ownership) and 14.7x pro forma
2015 EPS.
Investment highlights
 Deal closed 2/21/14 – With the consolidation now complete,
we update our estimates to reflect full pro forma adjustments
in Q1/14. We previously assumed the deal would close at
 No change to above-the-line estimates – As the consolidation
only affects items below, our revenue and EBITDA estimates
are unchanged. Our new estimates reflect materially lower
minority interest, higher interest expense due to increased
gross debt, and a higher pro forma tax rate.
 Continue to favor over others in space – As the continued
market leader in the US wireless industry, we continue to
favor Verizon over others in the sector. We believe a solid
Q1/14 report from its now wholly-owned wireless business
will continue to differentiate Verizon from the others in the



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