Overview
KeyBanc Capital Markets maintained a Sector Weight rating on Verizon Communications (NYSE:VZ) on Monday, signaling reservations about the carriers longer-term growth trajectory even as near-term results may meet expectations. Verizon is trading at a price-to-earnings ratio of 8.41 and is set to release quarterly earnings in four days on January 30. InvestingPro data cited by the firm shows that six analysts have revised estimates lower for the upcoming period.
What KeyBanc sees for 2026
KeyBancs analysis indicates the brokerage expects Verizon to guide to flat Wireless Service revenue for 2026, together with year-over-year declines in VCG ARPA (Average Revenue Per Account). Those outlooks underpin a cautious stance: while the fourth-quarter results themselves could align with street expectations, the firm warns that the revenue and ARPA trends create a risk to 2026 performance.
EBITDA projections and consensus comparison
The bank projects Verizons total adjusted EBITDA will rise by approximately 3.0% when the recently acquired Frontier Communications (FYBR) is included. Excluding Frontier, KeyBanc estimates about a 2% decline in adjusted EBITDA. Both of those figures sit below current consensus expectations. For reference, InvestingPro lists Verizons current EBITDA at $50.19 billion.
Subscriber growth strategy
KeyBanc noted Verizons recent focus on growing its subscriber base, but it characterizes much of that effort as repricing existing customers rather than generating outsized gains from new additions. The firm highlighted that, because of Verizons scale, subscriber growth carries less impact than back-book repricing activity.
Positive elements acknowledged
Despite the concerns, KeyBanc recognizes some constructive aspects of Verizons execution - particularly the carriers convergence opportunity and ongoing cost-reduction initiatives. Nevertheless, the brokerage concludes there remains "risk to the downside" for the company overall.
Corporate moves and market signals
Verizon has completed its acquisition of Frontier Communications Parent, Inc., with each Frontier share converted into $38.50 in cash. Frontier is now a wholly owned subsidiary of Verizon. Separately, Barclays has reinstated coverage on Verizon with an Equalweight rating and set a $43.00 price target, noting Verizon is trading at a discount relative to AT&T.
Service disruption and customer response
The company recently experienced a widespread service outage that led Verizon to offer impacted customers a $20 credit redeemable through the myVerizon app. The carrier acknowledged that the outage fell short of its usual standard of service.
Competitive context
Market analysts have signaled a competitive environment in the telecom sector. Bernstein has named AT&T as its top telecom pick, underscoring the heightened rivalry among major operators. Verizons recent activity appears aimed at expanding market presence while addressing service quality issues.
Looking ahead
With the next earnings report scheduled for January 30 and several analysts trimming near-term estimates, investors and market watchers will be focused on Verizons guidance for 2026, its view on Wireless Service revenue and VCG ARPA trends, and whether its adjusted EBITDA trajectory gains traction beyond the benefit of the Frontier acquisition.
Summary of the situation: KeyBancs Sector Weight reflects concern about 2026 growth and ARPA trends; EBITDA forecasts fall short of consensus; Verizon continues to return capital to shareholders while integrating Frontier and addressing service interruptions.