Verizon Communications Inc.’s stock is experiencing a significant rebound, with its best daily performance in over three years. This development brings relief to Wall Street as concerns regarding the impact of lead-clad cables on telecommunications companies ease.
According to Dow Jones Market Data, Verizon’s shares (VZ, +5.22%) have surged 5.3% in midday trading, marking the largest single-day percentage increase since March 26, 2020. Additionally, the stock is on track for its best two-day percentage increase since July 27, 2017, with an 8% rise over the past two sessions.
The recent pressure on Verizon shares stemmed from the Wall Street Journal’s report on the historical use of lead-sheathed cables by the industry. Some of these cables remain buried underground or underwater, raising concerns among investors about potential costs associated with their removal or other remediation measures.
However, USTelecom, a trade group of which Verizon is a member, stated last week that neither regulators nor evidence have identified the legacy lead-sheathed telecom cables as a leading cause of lead exposure or a public health issue.
While Verizon’s stock faced challenges due to these concerns, the recent rally provides optimism for investors.
AT&T Inc. Shares Rise on Positive Lead-Cable Update
Shares of AT&T Inc. (T) continue to climb as the company provided an update regarding its lead-cable footprint. The announcement has quelled concerns about potential high removal costs, leading to a boost in investor confidence.
Positive Relief for Wall Street
AT&T offered an update on its lead-cable footprint, revealing that lead-sheathed cables account for less than 10% of its copper-cable footprint. Additionally, only a small portion of these cables run underwater. This news has reassured analysts, who initially feared substantial removal costs.
Verizon Offers Safer Investment Option
Oppenheimer’s Timothy Horan highlights that, compared to AT&T, Verizon poses a safer and more attractive investment option due to its lower lead exposure and wireline revenues.
A Comparison of Wireline Footprints
According to Morgan Stanley’s Simon Flannery, AT&T’s wireline footprint is three times larger than that of Verizon.
Infrastructure Upgrades: A Closer Look
Deutsche Bank’s Bryan Kraft points out that Verizon has a higher proportion of older infrastructure, particularly in the Northeast. However, Verizon has upgraded a greater percentage of its footprint compared to AT&T. Furthermore, Verizon has more aerial plant infrastructure, which is more likely to have undergone upgrades since 1950.
With these updates and reassurances, AT&T Inc. shares have experienced a 7.7% surge on Wednesday, poised to record their first gain in 11 trading days.