Verizon's stock will thrive as competitive pressures in the wireless carrier market decline, according to one Wall Street firm.
UBS raised its rating to buy from neutral on Verizon Communications shares, citing low valuation versus the market.
In a similar move, SunTrust Robinson Humphrey also upgraded Verizon shares to buy from hold Wednesday due to "attractive" valuation.
The wireless company's stock rose 2.1 percent Tuesday after it reported better-than-expected earnings results. The shares closed up 0.9 percent Wednesday.
"We believe the risk-reward is skewed to the upside given improvement in wireless (85% of EBITDA), a return to FCF growth and attractive valuation," UBS analyst John Hodulik wrote in a note to clients Wednesday. "With a rational pricing environment (amid rising investment) and slowing headwinds from … unlimited migrations, we believe recent wireless momentum is set to continue."
Hodulik reaffirmed his $55 price target for Verizon shares, representing 11 percent upside from Tuesday's close.
The UBS analyst said the company's stock trades at 10.6 times his estimated 2018 earnings, which is a 37 percent valuation discount to the S&P 500. He noted the multiple is "well below" Verizon's 13 percent average discount to the market over the past two decades.
"Carriers either increased pricing or have made dovish commentary that they will be more rational amid rising investment and a greater focus on profitability," he wrote. "Competition has increasingly focused more on value (offering free content) and less on price."
— CNBC's Michael Bloom contributed to this story.