The Zacks Analyst Blog Highlights: Verizon Communications, Apple, AT&T, Sprint Nextel and Reliance Steel & Aluminum

Zacks

For Immediate Release

Chicago, IL – May 22, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Verizon Communications Inc. (VZ), Apple Inc. (AAPL), AT&T Inc. (T), Sprint Nextel Corp. (S) and Reliance Steel & Aluminum Co. (RS).

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Here are highlights from Monday’s Analyst Blog:

Verizon Scraps Unlimited Plan on 4G

The wireless leader Verizon Communications Inc. (VZ) is slowly scrapping its unlimited data plans. Verizon puts a cap on its unlimited data plans with smartphone upgrade.

 

The company abolished unlimited data plans for all customers, who intend to upgrade their smartphones with the new high-speed data services (4G) at a discounted price. Verizon allows full price-paid customers to keep its unlimited plans with a flat monthly fee of $30. However, these customers have to shift to the shared data plan, when it becomes available in mid summer.

 

Customers are disappointed with this policy, as it compels them to pay more either in the form of service fees or smartphone prices.

 

On the other side, the move would be beneficial to Verizon. As the cell phone markets are saturated and customers are hungrier for data rather than voice, the new strategy will boost the company’s future data revenues. The company will also be able to pass on some subsidy cost related to Apple Inc.‘s (AAPL) iPhone to its customers in the form of service fees. This will lead to reduced expenses.

 

Verizon had already switched to tiered-data pricing plans from the unlimited data plans in June last year. However, the old and existing subscribers are still using the unlimited plans. Verizon is the first carrier, which is scrapping its unlimited plans for its existing customers.

 

Its major rival AT&T Inc. (T) still offers unlimited plans on smartphone upgrade but with certain limits, imposed two months ago. AT&T said that the data speeds on unlimited 3G and 4G smartphones would slow down when it exceeds more than 3 gigabytes (GB). The 4G LTE speeds will also lessen beyond 5GB in a particular month. The third largest U.S. wireless provider Sprint Nextel Corp. (S) continues to offer unlimited plans when subscribers upgrade their smartphones.

 

We are maintaining our long-term Neutral recommendation on Verizon. Currently, the stock retains the Zacks #3 (Hold) Rank for the short term (1–3 months).



Reliance Steel Raised to Outperform

We are upgrading our recommendation on Reliance Steel & Aluminum Co. (RS) to Outperform following its solid first-quarter 2012 results. Earnings of $1.54 per share topped the Zacks Consensus Estimate of $1.50. The company saw healthy double-digit growth in sales (up 20% year over year to $2,288.3 million), which beat the Zacks Consensus Estimate of $2,139 million.

 

Reliance Steel said that its results were boosted by strength across a slew of industries including energy, aerospace, farm and heavy equipment, and semiconductor. Higher sales volume and pricing also supported growth.

 

Moving ahead, the company expects higher growth across the energy and aerospace industries. However, it expects the pricing environment to remain uncertain for certain metals it sells.

 

Reliance Steel has tremendous earnings capacity with its broad and diversified product base, along with a wide geographic footprint that positions it well in the industry. The company continues to evaluate and execute additional growth projects and is well placed to leverage the strong momentum across a number of end markets.

 

The company’s expansion initiatives and strategic acquisitions should drive growth in 2012. The acquisitions of McKey and National Specialty Alloys (“NSA”) have enabled Reliance Steel to improve its product offerings and expand into newer markets.

 

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