Verizon (VZ) is exploring the sale of its media division, including Yahoo! and AOL. Bloomberg reports that the wireless carrier is looking to get as much as $5 billion from the sale.
According to Bloomberg’s report, the wireless career has opened up discussions with Apollo Global Management as a potential buyer. However, it is still unclear how the deal will be structured, or whether other buyers would emerge. Similarly, Verizon is yet to make a final decision and could shelve the sell-off plans.
Verizon has been on a restructuring drive in recent years as it looks to focus on its wireless business and 5G rollout. Bloomberg reports that the company has divested tertiary media assets in recent years, as focus shifts towards the core wireless business. Last year, it reached an agreement to offload HuffPost’s online news service, having also sold Tumblr in 2019.
The latest divestment drive, if successful, will mark Verizon’s exit from the expensive online advertising space. Since taking over as the CEO in 2018, Hans Vestberg has written off more than $4 billion in the media business and renamed the segment Verizon Media Group, reports Bloomberg. (See Verizon stock analysis on TipRanks).
Amid the sell-off, Verizon Media Group still boasts high-profile outlets, including Yahoo!, AOL, TechCrunch, and Flurry. According to Bloomberg, the unit delivered $1.9 billion in operating revenue in 1Q 2021, a 10% increase from last year.
While Verizon is on course to post stronger ARPU growth in 2021, MoffettNathanson analyst Craig Moffett believes it won’t be enough. The analyst downgraded the stock to a Hold from a Buy and cut his price target to $57 from $62. This implies that shares are fully priced at current levels, with less than 1% upside potential over the next 12 months.
However, Wall Street is cautiously optimistic on Verizon with a Moderate Buy consensus rating based on 5 Buys and 8 Holds. The average analyst price target of $61.30 implies about 7.9% upside potential to current levels.
Verizon scores a strong 9 out of 10 on TipRanks’ Smart Score rating system, suggesting it could outperform market expectations.