Samsung Electronics and Verizon Group Sign $6.65 Billion 5G Deal

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  • Reportedly, Samsung Electronics shares have rose over 3% to KRW 58,300
  • On the other hand, Verizon’s shares rose 0.12% to $60.55 in after trading hours on Friday and the stock is up about 2% so far this year

According to a report, American multinational telecommunications conglomerate, and South Korean multinational electronics company Samsung Electronics have recently announced to sign a deal worth $6.65 billion for 5G network equipment and services. 

In a statement by Samsung, it has been said “With this latest long-term strategic contract, we will continue to push the boundaries of 5G innovation to enhance mobile experiences for Verizon’s customers.” 

Increase in shares 

The South Korean company has also noted in a regulatory filing the period of the contact, which Samsung signed with Verizon, is from June 30,2020 to end-2025, according to Reuters. It has also been reported that Samsung Electronics shares have rose over 3% to KRW 58,300 on Tuesday. 

On the other hand, Verizon’s shares rose 0.12% to $60.55 in after trading hours on Friday and the stock is up about 2% so far this year. Another report has revealed the eleven analysts have forecast the average price in 12 months at $62.30 with a high forecast of $70.00 and a low forecast of $57.00. 

Stock Price Forecast 

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The average price target represents a 3.01% increase from the last price of $60.48. Morgan Stanley also gave a target procure of $60 with a high of $71 under a bull-case scenario and $42 under the worst-case scenario. Verizon stock price forecast was raised by Deutsche Bank to $62 from $60. 

Meanwhile, other equity analysts also recently updated their stock outlook. As mentioned earlier Verizon Communications had its price objective boosted by analysts at UBS Group to $60 from $59. The brokerage presently has a ‘neutral’ rating on the cell phone carrier’s stock. Citigroup boosted their price objective to $60 from $55 and gave the stock a neutral rating. 

Reports by Morgan Stanley 

On the other hand, Simon Flannery, Equity Analyst at Morgan Stanley said that “Attractive business mix, as wireless market leader. Wireless service revenue 70% of consolidated revenue, and wireless EBITDA 85% of consolidated EBITDA. Dividend yield and potential buybacks provide some support, while the transition to 5G creates opportunities and risks, with mid-band spectrum needs in focus.” 

Shawn Kim, another equity analyst shared that “Our price target for Samsung Electronics is W70,000: We continue to employ a residual income (RI) valuation model, cross-checked against P/BV analysis. At our W70,000 price target, the 2021 P/B multiple would be 1.4x, which is in line with its long-term mid-cycle valuation level of 1.4x. Our terminal growth rate assumption is 5%, and we assume an 11.5% cost of equity, based on a beta of 1.0.”

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