Verizon Communications "market perform"

05/24/04 - Morgan Keegan

NEW YORK, May 24 (New Ratings) - Analysts at Morgan Keegan maintain their "market perform" rating on Verizon Communications (VZ).

Shares of Verizon Communications, a leading communication services provider, are currently trading at $35.77.

According to Morgan Keegan's research note published this morning, Verizon Communications has announced the sale of its 707,000 Hawaiian access lines for $1.65 billion in cash to The Carlyle Group. The analysts mention that the sale price is in-line with expectations. The transaction is expected to close in 2005, the analysts add.

According to Morgan Keegan, the sell-off would boost the company’s 2004 EPS marginally due to the elimination of depreciation expenses associated with the Hawaii wireline property. This is likely to be offset by the company’s higher-than-expected healthcare expenses, the analysts say.

The EPS estimates for FY04 and FY05 are $2.44 and $2.69, respectively. The P/E estimates for FY04 and FY05 are 14.7x and 13.3x, respectively.

Morgan Keegan maintains its "market perform" rating on Verizon Communications.