Is Verizon a buy after Senion acquisition?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jun 21, 2021
  • Verizon announced the acquisition of the leading provider of indoor positioning solutions, Senion.
  • The telecommunications services provider will use the acquisition to ramp up its location-based solutions.
  • The company’s stock on Monday soared 1% after the announcement. Is it time to buy VZ shares?

US telecoms giant Verizon Communications Inc. (NYSE:VZ) Monday announced it is buying leading indoor-positioning technology company Senion. VZ shares gained 0.99% after the announcement. However, the stock continues to trade in a choppy pattern formation, losing 4.21% this year and up just 1.28% in the last 12 months.

How Senion boosts Verizon’s business

This acquisition strengthens Verizon’s position in the smart office market as companies continue to embrace 5G networks. Senion’s Smart Office solutions enable employees to focus on productive tasks. For instance, the indoor-positioning system ‘IPS’ helps employees find their way around and connect better. The system is also applicable in hospitals and learning institutions to enhance the experience.

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It will boost Verizon’s location-based offerings that empower companies efficiently and more safely manage workspaces. Verizon wants to provide technologies that will make the world more efficient and productive. The company is building technologies that will give corporations insight that will enable them to manage space better.

Jeff Frantz, Executive Director of Verizon Location Technology, said:

Sensor fusion and indoor positioning are foundational components for these next-generation capabilities. Combining Senion’s superior technology with the location-accuracy, speed, throughput, and reliability of Verizon’s 5G platform will help us push the boundaries of what’s possible.

Verizon shares’ modest gains over the last 12 months value the stock at a trailing 12-month P/E ratio of just 12.24. The forward P/E ratio stands at 10.82. Both valuations look compelling, making the stock attractive to buy.

Source – TradingView

Technical overview: expect Verizon’s choppy trading pattern to continue in the short-term

Verizon Communications looks too volatile to target long-term capital gains now. However, the company pays dividends at a healthy yield of 4.45%. 

VZ recently bounced back to avoid dropping to oversold conditions in the 14-day RSI. The stock now looks poised to advance above the 100-day moving average, retaining the choppy pattern formation.

Investors looking to capitalize on the rebound can target short-term profits at approximately $57.73 and $59.39. On the other hand, those looking for immediate pullbacks can target profits at $55.17 and $53.79.

Bottom line: Verizon’s long-term future looks promising, but the stock remains highly volatile in the short-term

Verizon’s acquisition of Senion will yield operational synergies in the long term. Therefore, the company looks well poised to command a significant share of the indoor-positioning technologies market. 

The stock recently bounced back after declining in choppy pattern formation. As such, bullish investors seem well-positioned to target extended rebounds in the short term. But you cannot rule out another pullback right after.

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