Verizon's Solid Q1 Earnings and Guidance Raise: Goldman Sachs Predicts Short-Term Outperformance

Goldman Sachs analyst James Schneider is bullish on Verizon's stock, expecting it to hold gains despite a competitive wireless environment and weak broadband market. Schneider believes investors were negatively positioned given slower growth expectations, and Verizon's strong financial results in EBITDA and free cash flow are encouraging. The firm has a Buy rating on the shares.

Verizon Communications (VZ) reported strong financial results for the second quarter of 2025, signaling a robust performance despite a competitive wireless environment and a challenging broadband market. The company's earnings call, held on Monday, July 21, 2025, highlighted significant improvements in key financial metrics, including revenue, EBITDA, and free cash flow [1].

Key Financial Highlights

- Revenue: Verizon's consolidated revenue reached $34.5 billion, up 5.2% year over year, driven primarily by wireless service and a more than 25% growth in wireless equipment revenue.
- EBITDA: Adjusted EBITDA was $12.8 billion, marking a 4.1% year-over-year increase and the highest reported quarter to date.
- Free Cash Flow: The company generated $5.2 billion in free cash flow for the quarter, bringing year-to-date free cash flow to $8.8 billion, a 3.6% increase over the first half of 2024.
- Net Additions: Verizon reported over 300,000 net additions across mobility and broadband platforms, with fixed wireless access (FWA) and Fios internet contributing significantly to this growth.

Operational Performance

Verizon's operational performance was notable for several key areas:

- Wireless Service: Wireless service revenue increased to $20.9 billion, up 2.2% year over year, attributed to higher consumer ARPA and pricing actions.
- Broadband: Broadband net additions reached 293,000, with FWA delivering 278,000 net adds and total FWA subscribers exceeding 5.1 million.
- Postpaid Phone Churn: Consumer postpaid phone churn remained consistent at 0.90%, influenced by prior pricing actions and elevated competitor promotional activity [1].

Guidance and Outlook

Verizon raised its full-year 2025 guidance for adjusted EBITDA, adjusted EPS, and free cash flow, reflecting the company's strong financial performance and the positive impact from recent tax reform. The adjusted EBITDA guidance was increased to a range of 2.5%-3.5% growth, while adjusted EPS guidance was raised to 1%-3% and free cash flow guidance was raised to $19.5-$20.5 billion [1].

Goldman Sachs Bullish on Verizon Stock

Goldman Sachs analyst James Schneider expressed a bullish outlook on Verizon's stock, expecting it to hold gains despite the competitive wireless environment and weak broadband market. Schneider attributed the positive outlook to Verizon's strong financial results in EBITDA and free cash flow, which he believes are encouraging. The firm maintains a Buy rating on Verizon shares [1].

Conclusion

Verizon Communications' strong financial performance in the second quarter of 2025, coupled with a positive outlook from analysts like James Schneider, suggests that the company is well-positioned to navigate the competitive wireless and broadband markets. The company's focus on customer-centric innovation, infrastructure build, and strategic guidance raises investor confidence in its ability to sustain growth and profitability.

References

[1] https://www.fool.com/earnings/call-transcripts/2025/07/21/verizon-vz-q2-2025-earnings-call-transcript/