) is expected to announce its Q2 earnings on July 22nd. During the
earnings, we will be keenly watching the uptake in subscriber
number for Verizon as it continue to expand its LTE 4G network
development, thereby challenging AT&T (
) and Sprint (
) in the wireless market. We will also look for its data revenue
growth number, which is a direct beneficiary of increasing
smartphone sales at Verizon.
Our $34.50 price estimate for Verizon stock
is about 5-10% below the market price.
Verizon's network upgrade to LTE gathering pace
Long Term Evolution, or LTE, is a next generation mobile network
technology that will offer higher speeds compared to 3G networks.
During the Q1 2011 earnings, Verizon talked about progress of
its 4G LTE network expansion in the U.S. When Verizon launched
LTE initially in Dec 2010, it launched the service in about 38
markets which covered 110 million PoPs (points of presence). Since
then it has expanded rapidly and expects to cover 185 million PoPs
in 175 markets in the U.S. by end of 2011. This rapid expansion is
helping Verizon gain subscribers and could have been the major
factor in Verizon gaining subscriber market share in the last
Increasing smartphone penetration for Verizon
During the last quarter's earnings call, Verizon indicated that
about 60% of the phones sold in Q1 2011 were smartphones and this
figure is a significant increase from the 36% in Q1 of 2010.
Smartphone users are heavy data users, which benefits Verizon
through higher data revenue growth. In our previous note titled
Smartphone Trends Bolster Verizon, but Investors
Might be Expecting Too Much
, we discussed that smartphone penetration is a key driver for
data revenue growth, which in turn is one of the important drivers
to Verizon's stock value.
We will watch and see how these numbers stack up for Verizon in
the upcoming earnings release.
See our complete analysis for Verizon