MoffettNathanson downgrades Verizon, calls telecom the 'biggest loser' of AT&T's aggressive promotions
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Verizon (NYSE:VZ) shares slipped on Thursday as investment firm MoffettNathanson downgraded the telecom giant, citing its beliefs that the wireless industry is getting more competitive and that Verizon has been the "biggest loser" of AT&T's (NYSE:T) aggressive promotional stance.
Analyst Craig Moffett lowered his rating on Verizon (VZ) to underperform from market perform, noting that Verizon (VZ) has "seesawed" between periods of being aggressive with its promotions and showing financial restraint, but has not leaned into either one.
While Moffett concedes Verizon (VZ) has "pulled back sharply" on its promotions in recent weeks, a sharp contrast to their strategy in the second-quarter, the analyst admits "there are no easy answers," even as the Hans Vestberg-led company has introduced a number of lower-priced plans to compete for subscribers.
AT&T (T) has managed to accelerate its subscriber growth, but it's come at the expense of its free cash flow and dividend coverage, with Moffett noting the company has an "arguably lower quality, customer base whose preservation is more dependent than ever on lucrative giveaways."
And with the wireless industry growth now showing signs of moderation and T-Mobile (NASDAQ:TMUS) continuing to extend its "competitive advantage" in 5G due to download and upload speeds, coverage and availability, Verizon (VZ) "appears particularly vulnerable," Moffett opined.
Moffett also noted that the cable industry has continued to add wireless subscribers, leaving incumbents such as Verizon (VZ) to respond with lower priced alternatives.
Verizon (VZ) shares fell more than 0.5% to $44.98 in premarket trading, while AT&T (T) and T-Mobile (TMUS) were flat at $18.43 and $145.45, respectively. 
Earlier this week, Berkshire Hathaway (BRK.B) (BRK.A) confirmed that it had exited its stake in Verizon (VZ), while making several other changes to its portfolio. 
Analysts are overwhelmingly cautious on Verizon (VZ). It had an average rating of HOLD from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Seeking Alpha's quant system, which consistently beats the market, also rates VZ a HOLD.