Citi upgraded Verizon (VZ) to Buy from Neutral with a price target of $40, up from $39.A variety of concerns have weighed on telecommunication operator sentiment and valuations, including competition, industry structure, higher rates and lead, the analyst tells investors in a research note. However, Citi now sees a “more constructive investment case” for large-cap telcos. The firm says the wireless competitive environment is showing positive signs of stabilization that should help operating performance. In addition, better forward free cash flow should help reduce net debt leverage and support dividend payouts that are trading at elevated yields, contends Citi. The upgraded both Verizon and AT&T (T) and keeps T-Mobile (TMUS) as its top pick.
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