Shares of Verizon Communications Inc. VZ, -0.09% were down 0.4% in premarket trading Monday after Instinet’s Jeffrey Kvaal downgraded the stock to neutral from buy, writing that he now has less confidence in the company’s ability to raise prices around the broader 5G launch.
“Verizon atypically reduced unlimited pricing in August,” Kvaal wrote. “While the reduction no doubt spurred subs to migrate from metered to unlimited plans, we also would have expected that at the initial, higher price.” Going forward, he expects that pricing action from AT&T Inc. T, +0.58% will “erode” the recent strength Verizon has been seeing with net additions. “A flaring price skirmish leaves us leery of both upward estimate revisions and multiple expansion,” he concluded, while lowering his price target to $65 from $67. Verizon shares have gained 7.4% so far this year, as the Dow Jones Industrial Average DJIA, +0.49% has risen 17%.