What to expect from Verizon and AT&T earnings

The country’s two largest wireless carriers are reporting first-quarter results this week, with Verizon Communications Inc. (NYSE: VZ) coming first, ahead of Tuesday’s opening bell. AT&T Inc. (NYSE: T) announces its results Wednesday after markets close.

Analysts have a consensus earnings per share (EPS) call for Verizon of $0.95, on revenues of $32.27 bln. That is about 13% more on EPS and 4.7% more in revenues than Verizon posted in the first quarter of 2014. The difference is at least partly due to the acquisition of all of Verizon Wireless, which was completed in February of 2014.

However, Verizon has disappointed analysts for the past two quarters, posting EPS a penny below estimates in both quarters. Verizon may or may not be rolling out a new streaming digital video package that represents a seismic shift in how content owners license their products. Verizon is signing up customers for the new packages, but Walt Disney Co.’s (NYSE: DIS) ESPN sports network has said that the offer may violate the agreement the network has with Verizon.

The consensus price target on Verizon stock is $51.54, and the 52-week trading range is $45.09 to $53.66.

AT&T, which was recently replaced by Apple Inc. (NASDAQ: AAPL) in the 30 stocks that make up the Dow Jones Industrial Average, is forecast to report EPS of $0.63 and revenues of $32.8 bln. As with Verizon, analysts have been within a penny of actual EPS in the past two quarters, one where the company beat the estimate and one where it did not. Just last week an analyst at Credit Suisse reiterated the firm’s Outperform rating on AT&T’s stock and $38 per share price target.

The consensus price target on AT&T is around $34.00 per share, and the 52-week range is $32.07 to $37.48.

There are a few headwinds for both telecom giants however. Analysts at Wells Fargo are projecting the T-Mobile US Inc. (NYSE: TMUS) added more handset subscribers in the first quarter of 2015 than either Verizon or AT&T — or Sprint Corp. (NYSE: S), for that matter. The analysts expect T-Mobile to add 1.03 mln postpaid (contract) subscribers in the first quarter, compared with around just 50,000 for Sprint. AT&T has already said it expects to add around 400,000 and Verizon is expected to add 620,000 postpaid customers, but most new subscribers at both companies are expected to add tablets not handsets.