Verizon: Expect Modest Share Gains and Falling Fees

Jul.19.10 | About: Verizon Communications (VZ)

Trefis members have created forecasts for two key drivers of Verizon’s (NYSE:VZ) stock over the last week: (1) Mobile Subscriber Plan Pricing, (2) Verizon Share of Monthly Mobile Subscribers. Their forecasts suggest that both Mobile Subscriber Plan Pricing and Verizon Share of Monthly Mobile Subscribers will rise slightly higher than the Trefis forecast. These projections suggest a combined upside of around 2-3% for Verizon’s stock. Verizon’s subscriber gains may come at the expense of competitors AT&T (NYSE:T) and Sprint (NYSE:S).

Mobile Plans & Phones is the most valuable division for Verizon, constituting 42% of the $35 Trefis price estimate for Verizon’s stock. In comparison, Broadband Internet and Enterprise Services like Network Access and Leased Lines account for 22% and 13%, respectively, of the Trefis estimate for Verizon’s stock.

Considering the importance of the Mobile Plans & Phones business, Verizon’s stock is quite sensitive to both 1) Mobile Subscriber Plan Pricing and 2) Verizon Share of Monthly Mobile Subscribers. Below are the charts showing recent estimates created by Trefis members for the two drivers.

1. Mobile Subscriber Plan Pricing

The average of forecasts for Mobile Subscriber Plan Pricing created by Trefis members indicate a decrease from around $40 in 2010 to around $34 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an decrease from $39 in 2010 to $32 by the end of the Trefis forecast period. The member estimates imply an upside of around 1.5% to the Trefis price estimate for Verizon’s stock. In the past, Mobile Subscriber Plan Pricing decreased from $47 in 2005 to $37 in 2009.

You can drag the Mobile Subscriber Plan Pricing forecast trend-line above to express your own view, and see the sensitivity of Verizon’s stock to Mobile Subscriber Plan Pricing.

2. Verizon Share of Monthly Mobile Subscribers

The average of forecasts for Verizon Share of Monthly Mobile Subscribers created by Trefis members indicated a projected increase from about 32% in 2010 to about 36% by the end of the Trefis forecast period, nearly in line with the Trefis base estimate. The member estimates imply an upside of less than 1% to the Trefis price estimate for Verizon’s stock. In the past, Verizon Share of Monthly Mobile Subscribers has increased from about 24% in 2005 to about 31% in 2009.

You can drag the Verizon Share of Monthly Mobile Subscribers forecast trend-line above to express your own view, and see the sensitivity of Verizon’s stock to Verizon Share of Monthly Mobile Subscribers.

Disclosure: No positions