A Credit Suisse analyst downgraded Verizon Communications Inc. Thursday and said he no longer believes rival AT&T Inc. will lose its exclusive deal to carry Apple's iPhone before 2011.
Jonathan Chaplin lowered his rating on Verizon to "Neutral" from "Outperform," and cut his share price target to $30 to $32.
Chaplin said he'd originally preferred Verizon's shares over AT&T's in part because he believed AT&T would lose its exclusive iPhone contract with Apple in the middle of 2010. If this happened, he said a "substantial" number of subscribers and value would transfer to Verizon from its rival — "an event that was not adequately priced into either stock," according to Chaplin.
Now, Chaplin thinks AT&T won't lose its iPhone exclusivity until mid-2011 at the earliest.
Apple Inc. and AT&T have not disclosed the length of their exclusive contract. But Apple appeared to reaffirm its commitment to AT&T on last month during the unveiling of its iPad tablet computer, when it announced that the carrier will be the sole U.S. data provider for the device.
Chaplin also said his expectations for earnings-per-share growth at Verizon have "come down due largely to disappointing wireline margin results."
Verizon shares slid 37 cents to $28.82 in midday trading. AT&T stock was down 33 cents at $25.25.
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