{"id":36923,"date":"2023-07-17T17:58:17","date_gmt":"2023-07-17T21:58:17","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/verizons-lead-overhang-may-limit-dividend-increases-analyst-says-in-downgrade\/"},"modified":"2023-07-17T17:58:19","modified_gmt":"2023-07-17T21:58:19","slug":"verizons-lead-overhang-may-limit-dividend-increases-analyst-says-in-downgrade","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=36923","title":{"rendered":"Verizon\u2019s lead \u2018overhang\u2019 may limit dividend increases, analyst says in downgrade"},"content":{"rendered":"
\n

Verizon Communications Inc.\u2019s stock has been under pressure in the wake of recent reporting on legacy lead-sheathed cables used within the telecommunications industry, and one analyst worries the stock could stay in the penalty box. <\/p>\n

Edward Jones analyst David Heger downgraded Verizon shares
\n VZ,
\n -7.50%<\/bg-quote>
\n to hold from buy Monday, writing of his concerns after the Wall Street Journal reported on the lead cables that were used in the past by telecommunications companies and that are still in the ground and elsewhere today. <\/p>\n

\n

\u201cWe are uncertain if remediation measures could be required by environmental regulators and whether health concerns could cause sizable litigation liabilities,\u201d Heger wrote. \u201cSimilar to other companies that have faced environmental health issues, we think that uncertainty around these issues could limit share appreciation for Verizon.\u201d <\/p>\n

Shares of Verizon were down 7.5% Monday, while shares of AT&T Inc.
\n T,
\n -6.69%<\/bg-quote>,<\/span>
\n downgraded at Citi Monday, were off 6.8%.<\/p>\n

See also: <\/strong>Verizon\u2019s stock slides toward lowest level in more than 12 years amid longest losing streak since 2017<\/p>\n

Heger keyed in on Verizon\u2019s dividend in his note to clients. The stock\u2019s yield had already been \u201celevated\u201d at upwards of 7% before Monday\u2019s trading began, \u201cwhich may indicate concern about the dividend\u2019s sustainability,\u201d he wrote. While Verizon\u2019s dividend coverage is expected to improve as 5G spending falls this year and next, Heger wonders if the \u201coverhang\u201d related to lead-sheathed cables will limit the company\u2019s flexibility.<\/p>\n

The cost of potential environmental-remediation measures \u201cis difficult to estimate and might limit Verizon\u2019s ability to increase its dividend while covering these costs,\u201d he wrote. \u201cWe think these concerns are balanced with our expectations for improvements in consumer wireless, continued growth in wireless revenue, and improving free-cash flow as Verizon completes 5G network investments.\u201d<\/p>\n

Read<\/strong>: AT&T sees \u2018incredibly healthy\u2019 wireless market, even as several factors will ding growth this quarter<\/p>\n

Verizon directed a request for comment to USTelecom, a trade association of which it is a member. <\/p>\n

\u201cWe have not seen, nor have regulators identified, evidence that legacy lead-sheathed telecom cables are a leading cause of lead exposure or the cause of a public health issue,\u201d a spokesperson for the trade group said last week.<\/p>\n

The spokesperson added Monday that there are various considerations that determine \u201cwhether legacy lead-sheathed telecom cables should be removed or should be left in place, including those regarding the safety of workers who must handle the cables, potential impacts on the environment, the age and composition of the cables, their geographic location, and customer needs as well as the needs of the business and infrastructure demands.\u201d<\/p>\n

The industry \u201cstands ready to engage constructively on this issue,\u201d the spokesperson said.<\/p>\n

Raymond James analyst Frank Louthan IV, meanwhile, wrote that Wall Street seems to be \u201cmaterially off base\u201d with expectations for the cost of cable removals, which he thinks won\u2019t be as high as investors anticipate. He\u2019s also not sure if the cables will all need to be removed given \u201capparent lack of action to date\u201d on the part of regulators. <\/p>\n

\u201cWhen we put all this into perspective, and given that this was within the environmental regulations of the time and risk of increased contamination is low,\u00a0it seems reasonable that the cost of this will be spread out over 10+ years, further minimizing the risks to the carriers and their investors,\u201d Louthan wrote. <\/p>\n

He added that the focus likely \u201cwill shift from cable removal to liability for workers that had reasons to claim ingestion and the related harm, which has a higher likelihood of being covered with various insurance the industry has.\u201d<\/p>\n

Don\u2019t miss: <\/strong>Verizon CEO says the wireless market isn\u2019t such a bad business after all<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Verizon Communications Inc.\u2019s stock has been under pressure in the wake of recent reporting on legacy lead-sheathed cables used within the telecommunications industry, and one analyst worries the stock could stay in the penalty box. Edward Jones analyst David Heger downgraded Verizon shares VZ, -7.50% to hold from buy Monday, writing of his concerns after […]<\/p>\n","protected":false},"author":1,"featured_media":36924,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-36923","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nVerizon\u2019s lead \u2018overhang\u2019 may limit dividend increases, analyst says in downgrade | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Verizon Communications Inc.\u2019s stock has been under pressure in the wake of recent reporting on legacy lead-sheathed cables used within the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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