Monday, November 29

Cellnex. UK towers and results, catalysts for a 25% rise

Cellnex marked a double stock market milestone in August. In the final stretch of that month, the shares reached their all-time highs above 60 euros. A few days before, it had become the fourth value of the IBEX 35 in market capitalization, surpassing the barrier of 40,000 million.

Since then, however, its shares have fallen more than 10 percent and the operator is now trading at just over 53 euros per share. It still maintains a double-digit revaluation in the accumulated of the year, in which it adds up to 12 percent.

But now, after presenting its quarterly results and approaching a key date for its great move in the United Kingdom, the purchase of the Hutchinson towers, the consensus consulted by it skyrockets the potential of the stock by 25 percent.

Something that yields a target price of 67 euros, so Cellnex would consolidate even more at its highest levels on the IBEX 35.

Results meet expectations

The new acquisitions that Cellnex has gradually added – in April, for example, it added 10,000 towers in Italy to its portfolio – boosted revenues between January and September by 53 percent to 1,760 million.

Precisely in April, Cellnex announced a capital increase of 7,000 million and new investments worth 9,000 million, a reflection of the financial muscle it has.

Other indicators such as adjusted ebitda also shot up, by 59 percent, to 1,334 million.

“Revenues have grown thanks to the consolidation of the acquired towers and a growth in the points of presence,” they explain in Renta 4 in a report after knowing the accounts.

The analysts pointed out as a negative part that net debt increased in the period due to the closing of operations, “despite the continued excellent cash generation.” On the contrary, they appreciated that the company reiterated the guide for 2021 and, in the same way, maintained the forecasts in its plan for 2025.

“Cellnex has a great capacity for growth, both organically and through acquisitions. We foresee an annual cash flow increase of 25 percent between 2020 and 2026 ”, they explain, for their part, in Bankinter, who point out that the company“ should also benefit from an inflationary environment ”.

Focus on UK

After the results, the sights are now turned towards British lands. In November of last year, Cellnex announced the purchase of 24,600 towers from Hong Kong-based operator Hutchinson, in an operation set at 10,000 million euros; of the total, 8,600 million were paid in cash, and the other 1,400 million in shares of the Barcelona operator, 5 percent of its total shareholders.

“Attention will now turn to the outcome of the deal, after which M&A opportunities should again come to the fore. We see it as one of the positive catalysts limited to the short term ”, they explain at Barclays.

Nevertheless, the operation is still pending that the British regulator, the CMA, of its approval before the possible threat that it would suppose for the competition. The agency came to warn of this in a note published in mid-July, while the operator BT, one of the largest in the United Kingdom, sent a letter at the end of September to the CMA itself in which it charged against the operation.

“There are concerns about the deal in the UK. We still have hope for a positive outcome, although much depends on how the CMA views CTIL’s independence. [otra de las compañías participantes]”, They detail in Barclays.

“We do not believe that the CMA decision should be delayed beyond January 10 next year,” JP Morgan analysts explained in a note.

Months stuck at 52 euros

If the authorization arrives, the shares would be headed to beat their all-time highs again after being stuck between 51 and 52 euros since the end of August.

“He has made a double bottom in that area, but he could have a goal up to these highs. His first stop is around 54.5 euros, and in the medium term we could see a target of 57 euros, ”explains Joaquín Robles, an analyst at XTB.

“It’s close to all-time highs, Maybe if inflation soars, investors will take refuge in Cellnex. It happens like energy companies, it has constant and predictable cash flows because most are contracts with large long-term telemarketers, and many of them are linked to inflation, ”the analyst pointed out to

Some analysts have already heated up the company’s potential with their latest recommendations.

BNP Paribas and GVC Gaesco they reviewed their position in the last week and issued target prices of 65 and 70 euros per share respectively. Further went the analysts of Bestinver, which yielded a target price of over 88 euros per share.

The stock has 87 percent purchase recommendations according to the consensus consulted, which leaves it as one of the IBEX companies with the best percentage.

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