Verizon Communications (NYSE:VZ) Has More Than Apple (NASDAQ:AAPL) iPhone Going for it

Verizon Communications (NYSE:VZ) gave solid guidance for full year 2011, as it was higher than analysts were looking for. But they have more going for them than the iPhone (NASDAQ:AAPL), says FBR, which sees improvement in XaaS as a generator of revenue in the short term.

FBR says, "Yesterday, the stock was driven by a more bullish FY11 outlook, versus expectations, i.e., revenue and EPS guidance were above the Street while capex was in line (despite the inclusion of estimated $1B in capex to crystallize tax incentives). Impressively, the company guided for incremental cost reductions to offset iPhone dilution. The short-term investment thesis will focus on the level of iPhone sales and upgrades, but we see several other structural trends developing, i.e., improved competitive positioning in the X as a service (XaaS) cloud play, which may drive incremental revenue growth through the reshaping of relationships with content owners (explaining the net-neutrality appeal).

"Notably, we are raising our FY11 revenue estimate from $108.3B to $111.8B, slightly raising our FY11 EBITDA estimate from $34.6B to $35.4B, and raising our FY11 EPS forecast from $1.93 to $2.22."

FBR Capital reiterates a "Market Perform" on Verizon Communications (VZ), which was trading at $36.35, gaining $0.56, or 1.58 percent, as of 1:45 PM EST. FBR raised their price target on Verizon from $30 to $34.