) and Verizon's (VZ
Analyst John Hodulik says his analysis of pension and post-retirement benefit accounting at these Bell pure plays suggests earnings per share pressure will increase in 2003. He says pension comps should add to an earnings drag in 2004, even assuming normal returns on plan assets.
Hodulik thinks continued erosion of earnings per share combined with a lack of visibility, given current regulatory environment, should make it increasingly difficult for carriers to expand their 2003 price-earnings multiples. He sees $2.09 BellSouth earnings per share and $2.02 in 2003. He also sees $2.98 2002 Verizon earnings per share and cut the $2.96 2003 estimate to $2.90.
Hodulik also cut the $26 BellSouth target to $22 and trimmed the $34 Verizon target to $32. He maintains his hold rating on both companies.