Can Verizon Stock Gain 50% To $59 As 5G Buildout Winds Down?

VZ: Verizon logo

Verizon stock (NYSE:VZ) currently trades at about $40 per share, 33% below the levels seen on May 10, 2021 (pre-inflation shock high) of $59. In comparison, peer T-Mobile (NASDAQ:TMUS) has seen its stock gain about 25% over the same period. Verizon saw its stock trading at around $51 at the end of June 2022, just before the Fed started increasing rates, and has lost about 22% since. In comparison, the S&P 500 gained 43% during this period. Verizon is being impacted by slower growth in the wireless phone space following the easing of Covid-19, while competition has also been mounting with carriers doling out aggressive promotions to add customers. Moreover, while Verizon was traditionally known to have the most robust and reliable wireless network, T-Mobile appears to have gained considerable ground in the 5G era, driven by its vast mid-band spectrum holding.  Separately, rising interest rates have also likely made dividend stocks, such as Verizon, a bit less attractive to investors, while also making highly leveraged companies a bit more risky.

Looking over a slightly longer period, VZ stock has suffered a sharp decline of 35% from levels of $60 in early January 2021 to around $40 now. This compares to an increase of about 45% for the S&P 500 over this roughly 3-year period. In contrast, Arista Networks (NYSE:ANET), a networking company that is a leader in high-speed networks tools, has seen its stock surge by over 300% over the same period. Turns out, Arista is part of the 30-stock Trefis High Quality (HQ) Portfolio, which has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Now, coming back to VZ stock, can it outperform going forward?

Returning to the pre-inflation shock level would mean that Verizon stock will have to gain almost 50% from here. However, we estimate Verizon’s valuation to be around $42 per share, about 5% ahead of the current market price. While we believe Verizon can expand its earnings, driven by more premium plans and the winding down of its expensive 5G build-out, the stock could see some headwinds due to economic uncertainties. Our detailed analysis of Verizon’s upside post-inflation shock captures trends in the company’s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock’s performance during the 2008 recession.

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2022 Inflation Shock

Timeline of Inflation Shock So Far:

  • 2020 – early 2021: An increase in money supply to cushion the impact of lockdowns led to high demand for goods; producers were unable to match up.
  • Early 2021: Shipping snarls and worker shortages from the coronavirus pandemic continue to hurt the supply chain.
  • April 2021: Inflation rates cross 4% and increase rapidly
  • Early 2022: Energy and food prices spike due to the Russian invasion of Ukraine. Fed begins its rate hike process
  • June 2022: Inflation levels peak at 9% – the highest level in 40 years. The S&P 500 index declined more than 20% from peak levels.
  • July – September 2022: Fed hikes interest rates aggressively – resulting in an initial recovery in the S&P 500 followed by another sharp decline
  • Since October 2022: Fed continues rate hike process; improving market sentiments help S&P500 recoup some of its losses.
  • Since August 2023: the Fed has kept interest rates unchanged to quell fears of a recession and there is a possibility of rate cuts in 2024.

In contrast, here’s how Verizon stock and the broader market performed during the 2007/2008 crisis.

Timeline of 2007-08 Crisis

  • 10/1/2007: Approximate pre-crisis peak in S&P 500 index
  • 9/1/2008 – 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)
  • 3/1/2009: Approximate bottoming out of S&P 500 index
  • 12/31/2009: Initial recovery to levels before accelerated decline (around 9/1/2008)

Verizon and S&P 500 Performance During 2007-08 Crisis

Verizon stock declined from a little over $42 in September 2007 to just $27 as of March 2009 (as the markets bottomed out), implying the stock lost nearly 37% of its pre-crisis value. It recovered from the 2008 crisis to levels of around $31 in early 2010, rising roughly 16% between March 2009 and January 2010. The S&P 500 Index saw a decline of 51%, falling from levels of 1,540 in September 2007 to 757 in March 2009. It then rallied 48% between March 2009 and January 2010 to reach levels of 1,124.

Verizon Fundamentals Over Recent Years

Verizon’s revenues rose from around $132 billion in 2019 to about $137 billion in 2022 led by higher demand for wireless data services following Covid-19 and the expansion of the company’s 5G network. Revenue stood at about $134 billion in 2023. Verizon’s earnings also rose from around $4.66 per share in 2019 to $5.06 in 2022 driven by higher sales, although it fell to $2.75 in 2023.

Does Verizon Have A Sufficient Cash Cushion To Meet Its Obligations Through The Ongoing Inflation Shock?

Verizon’s total debt increased from $111 billion in 2019 to about $151 billion in 2023, while its total cash stood at under $3 billion as of the most recent quarter. It also garners about $38 billion in cash flows from operations. Although the company’s cash holdings are relatively low relative to debt, its stable cash flows put it in a reasonably healthy condition financially.


With the Fed’s efforts to tame runaway inflation rates helping market sentiment, we believe Verizon stock has the potential for reasonably strong gains once fears of a potential recession are allayed. That said, fears of a potential recession and concerns about competition could weigh on the company’s returns in the near term.

Returns Jun 2024
MTD [1]
YTD [1]
Total [2]
 VZ Return -4% 5% -26%
 S&P 500 Return 3% 14% 143%
 Trefis Reinforced Value Portfolio 2% 6% 655%

[1] Returns as of 6/17/2024
[2] Cumulative total returns since the end of 2016

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