Verizon Downgraded To Sector Perform At RBC As Smartphone Competition Looks To Continue In 2017

Shares of Verizon Communications Inc. were trading lower in premarket trade on Wednesday after the stock was downgraded to sector perform from outperform by analysts at RBC Capital, led by Jonathan Atkin. The internet, mobile phone and cable provider reported mixed fourth-quarter earnings on Tuesday and Atkin wrote "the 2017 outlook reflects a challenging fundamental backgroup in light of continuing industry competition." RBC sees more attractive carriers in other large-cap carrier sectors. Revenue for Verizon's wireless segment came in above RBC's consensus, but device incentives, in the form of smartphone exchange offers, resulted in a 380 basis points year-over-year decline in margins. Subscribers migrated to new rate plans offered to compete with other carriers. Atkin expects this competition to stay elevated in 2017 and pointed to T-Mobile US Inc. as an aggressive share taker. Verizon shares are up 6.6% in the trailing 12-month period, while the S&P 500 Index is up 21.5% in the same time frame.