Vladimir Zernov
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Verizon Video 17.02.21.

Berkshire Hathaway Bought An $8.6 Billion Stake In Verizon

Shares of Verizon are up by more than 4% in today’s trading session after Warren Buffett’s Berkshire Hathaway disclosed that it acquired an $8.6 billion stake in the company.

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Verizon stock remained under material pressure since early December 2020. At the end of January, the company released its quarterly report which included revenue of $34.7 billion and adjusted earnings of $1.21 per share.

The report exceeded analyst expectations on both earnings and revenue but failed to provide additional support to the company’s shares. At the beginning of this year, the market remained focused on high-growth stories which may have put additional pressure on Verizon shares.

Verizon stated that it expected to report adjusted earnings of $5.00 – $5.15 per share in 2021. Currently, analysts project that the company will be able to meet its target, so the stock is trading at about 11 forward P/E which looks rather cheap in today’s market.

Most likely, Berkshire Hathaway was attracted by the company’s valuation which became more attractive after the stock declined from the $62 level to the $54 level in just two and a half months.


What’s Next For Verizon?

Berkshire’s moves always attract plenty of interest so Verizon shares have a good chance to gain additional upside momentum in the upcoming trading sessions.

The stock traditionally attracts income-oriented investors and yields about 4.4% at current prices. This time, income investors may be joined by some momentum traders who want to bet on increased investor interest after Berkshire’s purchase.

From a big picture point of view, Verizon remains a defensive stock which may get some additional support in case the market risk appetite decreases a bit and investors pull some money out of high growth stories which have become very expensive during the recent market rally.

For a look at all of today’s economic events, check out our economic calendar.

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