Verizon's stock finally had a positive year. This bull sees bigger gains in 2024.

Verizon Communications Inc. shares eked out a 3% increase in 2023 to notch their first positive annual performance in five years. Could bigger gains be in store for 2024?

KeyBanc Capital Markets analyst Brandon Nispel seems to think so, upgrading the telecommunications stock to overweight from sector weight late Tuesday. His price target of $45 implies more than 15% upside from Tuesday’s close of $38.88.

Investors “are likely to see a deleveraging story with the potential for share repurchases” into 2025, Nispel wrote in his note to clients.

While he said Verizon VZ, +1.25% will continue to see declines in its postpaid phone market share, the company will start to show improvement in its share of net additions and share of gross additions. Additionally, Verizon could deliver improvement in its postpaid phone net adds during each quarter of 2024, while Nispel anticipates that peers AT&T Inc. T, +0.14% and T-Mobile Inc. TMUS, +1.13% will show deceleration on the metric on a year-over-year basis.

Don’t miss: 11 dividend stocks with high yields expected to be well supported in 2024 per strict criteria

Further, Nispel said he is encouraged by the relatively low competitive intensity within the wireless industry. That indicates operators aren’t keen to offer lavish promotions to consumers at the expense of corporate margins.

“Wireless carriers appear complacent with their performance, and no one wants to ‘rock the boat,’ which makes us want more wireless exposure,” he wrote. Meanwhile, postpaid phone subscriber growth could continue at above-average rates in another positive development for the industry.

Nispel said Verizon shares are attractively valued, trading at 6.2 times enterprise value to estimated 2025 earnings before interest, taxes, depreciation and amortization (Ebitda). That compares with a 10-year average of 6.8 times.

Verizon’s stock was up about 1% in Wednesday’s premarket trading.