Huawei Technologies Co Ltd was reported to have filed a lawsuit against Verizon Communications Inc (VZ) on allegations 12 of its patents were used by the US company with no authorization.
Verizon shares closed higher for a third consecutive trading session in New York on Thursday. The stock went up 0.52% ($0.31) to $59.44, after touching an intraday high at $59.67, or a price level not seen since February 3rd ($59.68).
Shares of Verizon Communications Inc have retreated 3.19% so far in 2020 compared with a 3.56% gain for the benchmark index, S&P 500 (SPX).
In 2019, Verizon’s stock went up 9.21%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.
According to documents filed with the Eastern and Western District courts in Texas, the Chinese telecommunications equipment manufacturer requests compensation, as its technology has been used in fields such as computer networking, download security and video communications. Huawei also requested ongoing royalty payments.
“Verizon’s products and services have benefited from patented technology that Huawei developed over many years of research and development,” Huawei’s Chief Legal Office said in a statement, cited by Reuters.
“Huawei is simply asking that Verizon respect Huawei’s investment in research and development by either paying for the use of our patents, or refraining from using them in its products and services.”
Court documents also revealed allegations that Verizon had “profited greatly” from Huawei’s technology, as Verizon’s Wireline segment had generated $29.8 billion in revenue in 2018.
Analyst stock price forecast and recommendation
According to CNN Money, the 23 analysts, offering 12-month forecasts regarding Verizon Communications Inc’s stock price, have a median target of $64.00, with a high estimate of $70.00 and a low estimate of $54.00. The median estimate represents a 7.67% upside compared to the closing price of $59.44 on February 6th.
The same media also reported that at least 20 out of 27 surveyed investment analysts had rated Verizon Communications Inc’s stock as “Hold”, while 7 – as “Buy”.