Friday, December 3

Telefónica touches the 4 euros before the rumors of consolidation in Spain


Telefónica’s share lives this Thursday an additional boost in the stock market, by climbing one percent and being close to the key level of 4 euros (specifically, it is trading at 3.95 euros after the half session).

In this way, the annual revaluation of the company is close to 22 percent (it stands at 21.99 percent).

Among the reasons that could be promoting the purchases of the value this Thursday are the rumors of consolidation in the Spanish market, after both Vodafone and Orange have made comments in this direction.

Consolidation rumors benefit Telefónica

Specifically, the CFO (chief financial officer) of Orange in our country, Ramón Fernández, said this Thursday at a conference that the company “is actively analyzing the Spanish market and its structure.” “If there is a good possibility of concentration that affects us directly, we will consider it, of course,” he added.

These statements came after similar demonstrations by Vodafone, another of the key operators in the Spanish territory, who said it was looking for “consolidation opportunities in Spain”, this week.

It so happens that the high competition in the Spanish market (with a large number of operators and an open price war) is one of the issues that most worries investors, as it is leading to a continuous erosion of the number of customers and the revenue per customer that Telefónica obtains in Spain, its main market.

In this sense, any consolidation, whether it affects it directly or not, could be beneficial for the former state monopoly of telecommunications.

JP Capital Markets recommends buying Telefónica

On the other hand, another factor that may have driven Telefónica’s action this Thursday was produced on the flank of analysts.

Specifically, JP Capital Markets has published an update of its recommendation on Telefónica’s stock. Specifically, it maintains its purchase advice with a target price of 5.93 euros, very generous with respect to current trading levels.

This target price also far exceeds the Bloomberg consensus because, although analysts are relatively optimistic about the future evolution of the stock and give it a potential of 17 percent for the next twelve months, the target price remains below the one that JP Capital Markets gives you.

Specifically, the consensus target price stands at 4.62 euros.

In any case, this optimism is not shared by everyone. Many investors remember that this year’s good performance comes after a stock market decline of 47.8 percent in 2020 and 15 percent in 2019.

As we related in a recent issue of INVERSIÓN magazine, Telefónica has a growth problem and this has been noticed in the poor evolution of the company’s shares, which has passed from the 9.3 euros that marked the day that José María Álvarez-Pallete took control of the company, almost six years ago, to the current 3.95.



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