Scotiabank on Monday adjusted its 12-month price target for Verizon Communications (NYSE:VZ) upward to $50.25 from $48.00, yet left its rating on the stock at Sector Perform. The bank's revised target still sits below InvestingPro's Fair Value estimate, a gap that Scotiabank interprets as an indication that Verizon may remain undervalued despite a recent sharp uptick in the share price.
The move follows Verizon's announcement of a targeted strategy to reduce customer churn, including a $3 billion allocation for the initiative in 2026. Scotiabank incorporated that planned spending into its updated model as well as the company's acquisition of Frontier, adjusting assumptions to reflect related cost-reduction measures and the planned investment in churn mitigation.
In commenting on market reactions, Scotiabank said it was not surprised by the bullish response in Verizon shares on Friday. The bank did express surprise, however, at the positive reactions in the shares of T-Mobile and AT&T, noting that improvements in Verizon's competitiveness tied to lower churn would logically pressure rival carriers rather than boost them.
On the revenue front, Scotiabank now expects Verizon's wireless service revenues to be essentially flat in 2026 after factoring in the Frontier deal and the investments linked to customer retention efforts. The bank described Verizon stock as "still cheap" on a valuation basis, but it maintained the Sector Perform rating because it wants to observe early signs that churn trends are moving in the right direction before upgrading its recommendation.
Market metrics cited in Scotiabank's analysis include a price-to-earnings ratio of 10.97 for Verizon and a dividend yield of 6.2%. InvestingPro data referenced by the bank indicate Verizon has paid dividends for 43 consecutive years and delivered a 20.76% price total return over the past year. Scotiabank highlighted those figures while underscoring that valuation alone is not sufficient to warrant a higher rating without operational evidence of churn improvement.
Separately, Verizon's recently reported fourth-quarter 2025 results topped Wall Street expectations. The company posted earnings per share of $1.09 versus the $1.06 consensus estimate, and revenue of $36.4 billion compared with the $36.1 billion forecast. Scotiabank folded these results into its view of the firm as it refined its 2026 expectations.
On the leadership front, Verizon is reportedly exploring potential replacements for Sowmyanarayan Sampath, the head of its consumer division. According to the report referenced by Scotiabank, the company has approached possible candidates but has not yet conducted formal interviews or engaged an executive search firm. That effort is part of wider corporate moves aimed at reinforcing the team responsible for consumer-facing strategy and execution.
Scotiabank's outlook balances an upgraded price target with caution: while valuation and recent quarterly performance are supportive, the bank is looking for verified, early-stage improvements in churn metrics before it shifts to a more favorable stance. Investors and market participants will likely be watching Verizon's 2026 churn-related spending and the operational impact of the Frontier acquisition to assess whether the company can convert strategic investment into sustainable revenue performance.