Telecom & Wireless

24/7 Wall St. 2007 Price Targets: Verizon, $32

Over the next week 24/7 Wall St. will set mid-year price targets (June, 30, 2007) for the sixty most widely traded stocks. These targets will be based on past price performance, industry activity, forward projections of financial performance, outside analyst opinions, and research conducted for doing past articles on these firms. The price targets assume flat markets over the next six months. In other words, if the Nasdaq moved up 25% between now and mid-year, the target share price targets would probably be too low. If the market moved down by 20%, they would probably be too high

Verizon. (VZ). Some assumptions about Verizon are safely set in stone. Its Verizon Wireless business (a joint venture) will continue to do well. Along with Cingular it dominates the cell market in the US. Fixed line telephone service will become a smaller part of revenue as customers move to voice over IP.

But, the largest assumption about Verizon has to do with its $18 billion fiber-to-the-home initiative. Will high speed service that can deliver a bounty of high-definition channels take any meaningful business away from cable and satellite TV companies?

Recent signals about the fiber systems, dubbed FIOS, have not been good. Over the next week 24/7 Wall St. will set mid-year price targets (June, 30, 2007) for the sixty most widely traded stocks. These targets will be based on past price performance, industry activity, forward projections of financial performance, outside analyst opinions, and research conducted for doing past articles on these firms. The price targets assume flat markets over the next six months. In other words, if the Nasdaq moved up 25% between now and mid-year, the target share price targets would probably be too low. If the market moved down by 20%, they would probably be too high”>head of the project left Verizon. The pessimists went wild: “This is the beginning of the end for FiOS,” says the Washington, D.C.-based telecom investment veteran, who has no position in Verizon. (from TheStreet.com) As TheStreet further points out: “Still, Verizon has been heavily criticized ever since it launched its fiber-to-the-home strategy as a way of battling cable companies with the triple play of TV, fast Internet and phone service. Taking on the staggering costs of rewiring houses amounted to a gamble that a big data pipe would open up new sources of revenue.”

Comcast recently said that its will not lose many cable customers to Verizon and AT&T. They are probably right.

Factors that could push stock price above target: Any early indication that Verizon’s fiber TV is gaining subscribers quickly will help that shares.

Factors that coul move stock below forecast: Cost overruns or slow subscriber uptake for the fiber project could really damage the shares.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies the he writes about.