By Angela Palumbo

Verizon Communications earnings could take a hit from the ongoing promotions it is offering customers, one Citi analyst said.

Michael Rollins wrote in a research note on Thursday night that he believes an elevated promotional environment will weigh on Verizon's third-quarter financial results.

Verizon will report on Oct. 29. Analysts surveyed by FactSet expect the company to post earnings of $1.19 a share on revenue of $34.2 billion. In the same period last year, Verizon also posted earnings of $1.19 a share and revenue of $33.3 billion.

Telecommunication companies regularly host promotions to bring in new -- and hold on to existing -- customers in a highly competitive market. These promotions are marketed heavily when new phones release, such as the iPhone 17 lineup that launched in September.

Customers will see on the Verizon website that they can get an iPhone 17 Pro and an iPad "on us," with an eligible phone trade in. Other promotions include offers of up to $1,000 off a Google Pixel 10 Pro Folds, and other free smartphones through eligible trade ins.

While these promotions help retain customers, they can also pressure profit margins.

Other analysts have recently pointed out the possibility that phone promotions could increase in the months ahead, especially as new phones that are powered by artificial intelligence and have exciting new hardware options launch.

On top of paying attention to the financial results, investors will be listening closely to what new Verizon CEO Daniel Schulman has to say about his vision for the future of the company, Rollins said. Verizon announced it was appointing Schulman to the CEO post on Oct. 6.

"Our initial take is that Verizon will pursue a balanced approach between improving strategic volume growth and pursuing financial growth. This path may not be easy to accomplish both at the same time," Rollins wrote in his note. "One way forward may be to focus on reducing phone churn, identifying new cost efficiencies, and rebalancing capital allocation to support top-line growth and improve value for equity holders."

Rollins rates Verizon as a Buy with a $48 price target.

"We believe a stabilizing wireless competitive environment, improving service revenue and EBITDA, and valuation can support upside in the valuation from the current level," he wrote.

Verizon is currently trading at 8.3 times earnings expected over the next 12 months, which is below its five-year average of 9.1 times forward earnings.

Shares of Verizon were up 0.6% to $40.37 on Friday. The stock has risen 1% this year, compared with the 12% rise of the S&P 500.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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October 10, 2025 13:00 ET (17:00 GMT)

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