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Regarding the buzz as to whether Verizon (VZ) will sell the iPhone early next year, there seems to be little debate anymore. Now, Wall Street analysts are trying to figure out the fall-out. Take Credit Suisse analyst, Jonathan Chaplin. He has been crunching numbers and making forecasts. And according to his model, he thinks that roughly 1.4 million AT&T (T) iPhone customers will switch over to Verizon.
It's definitely a serious number.
However, Chaplin actually increased his rating on AT&T's stock from neutral to outperform. His price target has gone from $27 to $35. Crazy?
Not necessarily. The fact is that investors have been discounting a changeover. At the same time, AT&T realizes it needs to make adjustments (such as with its fees for terminations).
What's more, there is likely to be inertia for customers to make the switch. Why go through the process? Is the Verizon network enough to justify the move? So the drop-off in customers may actually not be as bad as forecasted.
Besides, AT&T offers a competitive dividend yield of a juicy 6%. In other words, there should be downside protection on this stock.
Tom Taulli is also the author of several books, including the Complete M&A Handbook as well as the upcoming book, All About Short Selling.
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