Verizon Communications Inc. (NYSE:VZ) is witnessing a remarkable resurgence in its stock, marking its strongest two-day rally in six years as it recovers from concerns surrounding lead-clad cables. Wall Street is finding solace in the telecommunications industry, alleviating worries about potential implications from these cables.
During midday trading on Wednesday, Verizon stock (NYSE:VZ) surged 5.3%, poised to record their highest single-day percentage increase since March 26, 2020, as reported by Dow Jones Market Data. Furthermore, the stock is also heading towards its most substantial two-day percentage rise since the period ending on July 27, 2017, with an 8% surge over the current two-session span. Notably, Verizon shares experienced an 8.7% increase during the 2017 stretch.
The recent pressure on Verizon’s stock stemmed from a Wall Street Journal report shedding light on the industry’s historical use of lead-sheathed cables, some of which remain buried underground or underwater. Investors grew concerned about the potential costs associated with removing these cables or implementing other remediation measures.
USTelecom, a trade group that includes Verizon as a member, addressed these concerns, stating, “We have not seen, nor have regulators identified, evidence that legacy lead-sheathed telecom cables are a leading cause of lead exposure or the cause of a public health issue,” in a statement released last week.
In a positive turn of events, shares of AT&T Inc. (NYSE:T) also witnessed an upswing on Wednesday, rising by 7.7% and potentially marking their first gain in 11 trading days. AT&T provided some relief to Wall Street when it offered an update on its own lead-cable footprint, indicating to analysts that the potential removal costs might not be as exorbitant as initially feared.
AT&T estimates that lead-sheathed cables constitute less than 10% of its copper-cable footprint, with only a small portion of those cables running underwater. Oppenheimer analyst Timothy Horan referred to Verizon as “a safer and more attractive investment” compared to AT&T due to its lower lead exposure and wireline revenues.
Addressing the wireline footprint comparison between the two companies, Morgan Stanley analyst Simon Flannery stated in a report on Wednesday that AT&T’s wireline footprint is three times the size of Verizon’s. Furthermore, Deutsche Bank analyst Bryan Kraft highlighted that while Verizon has a higher exposure in the Northeast, an area with older infrastructure on average, it has upgraded a higher percentage of its footprint compared to AT&T. Additionally, Verizon likely has more aerial plant infrastructure, which is more likely to have been upgraded since 1950.
Overall, the recent surge in Verizon’s stock is attributed to Wall Street’s increasing confidence in the telecommunications company’s ability to navigate and address concerns related to lead-clad cables. As the industry continues to reassess the potential implications, Verizon’s proactive approach and lower lead exposure position it favorably among investors.
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Author Faith Yakubu 
