Verizon Earnings: Stellar Cash Flow and Pricing Discipline Bode Well

Verizon delivered on nearly all fronts during the fourth quarter. Free cash flow hit $18.7 billion for the year, up more than 30% versus 2022 and well ahead of management expectations. The firm added 449,000 net postpaid phone customers in the quarter, its best performance in two years. Management warned that customer growth may moderate following another round of price increases on older rate plans that will take effect in March. However, it still expects to add both consumer and business phone customers during the year, which we believe reflects solid pricing discipline while messaging that it won’t allow rivals to pick off accounts with unduly aggressive promotions. We remain encouraged by the competitive balance in the wireless industry, and we are maintaining our $54 Verizon fair value estimate.