Verizon (VZ) to Augment Bayer's Global Network Capabilities

Zacks Equity Research
·4-min read

Verizon Communications Inc. VZ recently secured a five-year contract from Bayer AG BAYRY for an undisclosed amount to augment the existing global network capabilities of the life science firm. The strategic deal is part of the ongoing digital transformation initiative of Bayer and aims to develop state-of-the-art network technologies to improve the resilience, flexibility and scalability of the legacy network infrastructure.

Per the deal, Verizon will deliver managed network services to more than 700 sites, spanning 91 countries across the globe, and free up resources for Bayer to focus more on its core consumer health and pharmaceutical businesses. Notably, Bayer had a dedicated IT team that previously handled all the network management activities with support from various third-party technology firms, including Verizon. With steady progress to a cloud-first digital business model as part of its network modernization efforts, the pharmaceutical company decided to entrust the intricate network management services to Verizon, given its solid track record in this field.

On its part, Verizon will provide global Private IP network management services along with a managed software-defined Wide Area Network and Professional Services support and governance to help build a future-ready digital infrastructure to fuel its growth momentum. In addition to enhancing Bayer’s network efficacies, these are likely to enable a seamless and cost-effective network management to help realize its full potential. At the same time, the deal is likely to strengthen Verizon’s market position as a leading provider in network delivery services.

With the ramp-up of the 5G service, Verizon is likely to retain its lead in promulgating 5G mobile networks nationwide by using virtualized machines, advanced levels of operational automation and adaptability. Leveraging one of the most efficient wireless networks in the United States, the company continues to deploy the latest 4G LTE Advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investments. Verizon has been aggressively forging ahead to expand its fiber optics networks to support 4G LTE and 5G wireless standards as well as wireline connections.

Despite coronavirus-induced challenges, Verizon has completed the Dynamic Spectrum Sharing (“DSS”) trial to accelerate the pace of 5G network evolution. The trial underscores Verizon’s commitment to introduce nationwide 5G coverage with the deployment of the Ultra Wideband network services by the end of 2020. DSS will help the company deploy lower-frequency bands, including mid-band and low-band spectrums, to deliver an optimum combination of 5G coverage and speed to its customers. Moreover, in the enterprise and wholesale businesses, Verizon is changing its revenue mix toward newer growth services like cloud, security and professional services. Moving forward, the company aims to ride on the countless innovative technology solutions being developed in the Internet of Things and the telematics ecosystem across multiple industries. The mutually beneficial relationship with Bayer is a positive step in this regard.

Shares of this Zacks Rank #3 (Hold) company have gained 3.9% over the past year compared with the industry’s rise of 9%.

Better-ranked stocks in the industry include GCI Liberty, Inc. GLIBA and Cambium Networks Corporation CMBM, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With a VGM Score of B, GCI Liberty has gained 38.7% in the past year.

Cambium Networks has a long-term earnings growth expectation of 20%. It delivered a positive earnings surprise of 126.4% in the trailing four quarters, on average.

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