Verizon Communications Inc. (NYSE: VZ) last week saw its share price dip by $1.18 (about 2.6%) to retain its position as the worst-performing stock among the 30 equities included in the Dow Jones Industrial Average. For the year to date, Verizon’s shares are down 18.55%. General Electric Co. (NYSE: GE), Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp. (NYSE: XOM) are also down by more than 10% this year, with GE down 17.25%, Chevron down 12.07% and Exxon down 17.25%.
Chatter regarding a possible merger with Walt Disney Co. (NYSE: DIS) has heated up following a report last week in the New York Post. Verizon’s acquisition of Yahoo recently closed, but at a cost of $4.5 billion, the deal is not exactly a game changer for Verizon in the way that AT&T Inc.’s (NYSE: T) deal for Time Warner Inc. (NYSE: TWX) could be.
Not everyone is convinced though. Wells Fargo analyst Marci Ryvicker said her team “laughed. Out loud.” at the Post’s report. Barron’s cites a note she wrote for clients: “We do NOT believe Verizon is contemplating the purchase of Disney. Perhaps the New York Post mistook July 4th for April Fools.”
Disney’s market cap of around $162 billion is not that much lower than Verizon’s value of $177 billion. Any attempt to buy Disney would cost about $190, including the company’s debt, and not including a premium. Whether and how Verizon could manage that with its existing debt load of around $112 billion are reasonable questions for which the answers might be “probably not” and “who knows,” respectively.
Verizon stock closed at $43.48 per share on Friday, down about 0.1% for the day, after posting a new 52-week low of $43.21 earlier in the day. The stock’s 52-week high is $56.25 and the 12-month consensus price target is $49.67. The company’s dividend yield ended the week at 5.31%.
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