© Reuters. Verizon underperform stance has run its course, AT&T looks overvalued again
By Sam Boughedda
MoffettNathanson analysts upgraded shares of Verizon Communications (NYSE:) to Market Perform from Underperform and downgraded AT&T (NYSE:) to Underperform from Market Perform in a note to clients Monday.
The analysts maintained a $41 price target on Verizon and a $17 per share price target on AT&T telling investors that after an “unprecedented stretch of underperformance for Verizon, and a dramatic bounce for AT&T,” the firm believes its Underperform recommendation for Verizon has “likely run its course,” while the “relative valuations are now inverted; AT&T once again looks overvalued as we approach the new year.”
On Verizon, they explained that the stock has “significantly underperformed the broader market on both a YTD and more recent basis, a relative performance that is all the more noteworthy given Verizon’s low beta.”
“The bulk of that underperformance has come over the past six months as the weakness of their hand has become increasingly apparent,” the analysts continued.
“By contrast, and perhaps more surprisingly, AT&T has outperformed, and is now up handily relative to the broader market on both a year-to-date basis and, once again, particularly since the end of the second quarter.”
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