Verizon Communications Inc.: ISS experts recommend Frontier Communications Parent Inc. to postpone the merger deal
| Scenario | |
|---|---|
| Timeframe | Weekly |
| Recommendation | SELL STOP |
| Entry Point | 40.05 |
| Take Profit | 38.50 |
| Stop Loss | 40.50 |
| Key Levels | 38.50, 40.10, 40.90, 42.80 |
| Alternative scenario | |
|---|---|
| Recommendation | BUY STOP |
| Entry Point | 40.95 |
| Take Profit | 42.80 |
| Stop Loss | 40.30 |
| Key Levels | 38.50, 40.10, 40.90, 42.80 |
Current trend
Shares of Verizon Communications Inc., one of the largest American telecommunications companies, are adjusting at 40.00.
A potential deal to buy the fiber-optic communications operator Frontier Communications Parent Inc. ran into difficulties after Glendon Capital Management, which owns more than 10.0% of the company's shares, voted against merging with Verizon Communications Inc., arguing that the proposed price of 38.50 dollars per share is significantly lower than the potential value of assets. Following this, the consulting firm Institutional Shareholder Services (ISS) recommended that other shareholders refrain from the transaction and return to its discussion later, when the value of the securities may rise. At the moment, the proposed takeover amount is estimated at 20.00 billion dollars, but ISS experts believe that the actual cost of the project is at least twice as high.
The latest quarterly financial report of Verizon Communications Inc. reflected revenue of 33.30 billion dollars, which is slightly lower than the 33.40 billion dollars of analysts forecast and corresponds to the same indicator last year. Earnings per share (EPS) were 1.19 dollars, above preliminary estimates of 1.18 dollars, but below last year's value of 1.22 dollars.
Support and resistance
On the D1 chart, the asset is adjusted downwards, having not worked out the two previous price gaps between 43.58 and 41.23.
Technical indicators are in a stable sell signal state: the range of EMAs fluctuations on the Alligator indicator is expanding, and the AO histogram forms bars with a downtrend, holding below the transition level.
Support levels: 40.10, 38.50.
Resistance levels: 40.90, 42.80.
Trading tips
In case of a reversal and continued decline of the asset, as well as price consolidation below the support level of 40.10, one can open short positions with a target of 38.50 and a stop-loss of 40.50. Implementation period: 7 days and more.
In the event of a reversal and continued corrective growth of the asset, as well as price consolidation above the resistance level of 40.90, one may open long positions with a target of 42.80 and a stop-loss of 40.30.
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