Complicated day for Telefónica on the stock market. The operator's share has fallen 4.21% and has lost the level of six euros.
And the operator is piled up problems. In case the company did not have enough obstacles, the confrontation between the president of La Liga, Javier Tebas and the president of the Football Federation, Luis Rubiales on the schedules of the matches threatens the company's ability to profit from the strong commitment made for football rights, an investment that UBS experts value at 1,340 million. This added to the electoral result in Argentina, which has caused the collapse of the peso, is enough for the company to sharpen the stock market falls.
The declines have worsened in August, and have led the teleco to yield more than 18% since the beginning of the year. Telefónica remains one of the heavyweights of the Spanish Stock Exchange, but it is undeniable that its capitalization has suffered a strong correction. The company's stock market value reaches 31,985 million, occupying the fourth position of the firms that are worth the most of the Ibex and a great distance of the 56,320 million of Santander. At the beginning of the year, the operator occupied the same position, but the difference with the third (Iberdrola) was smaller. Telefónica had a capitalization of 38,110 million compared to 44,900 million of the electricity company.
Two days after UBS lowered the recommendation from buy to hold and cut the target price to 6.4 euros, Bank of America Merril Lynch follows in the footsteps. The US bank reduced the recommendation to neutral since buying and set 7 euros as the target price, 32% lower than the previous valuation. The company's potential is limited to 12%.
Among the main risks, the experts of the investment firm point to the negative impact of the currency effect, to which are added the high prices of their soccer offers at a time when the competition bets for lower rates to attract customers. Beyond the depreciation of Latin American currencies, the one that suffers the pound due to the doubts of a hard Brexit stands out. "Telefónica has a 45% exposure to currency deterioration," they say. The bank's analysis department indicates that the weakness of the pound is significant since 12% of the oibda comes from the United Kingdom. To the fall of the British currency is added the strong competition that exists in Britain for 5G.
Regarding the business in Brazil, experts say that the enthusiasm has vanished. "We expected better prospects for GDP and a stronger Brazilian real after the elections, but delayed reforms have failed to boost growth." This occurs in an environment in which the Brazilian subsidiary of teleco "continues to raise the prices of the mobile service, while in the landline there is a stabilization of revenues." Analysts delay stable fixed billing year-on-year in the first quarter of 2020 with a willingness to start growing.
In the national market, in addition to the football war Bank of America warns that the company presided by José María Álvarez Pallete is less exposed to the potential synergies of the shared use of the mobile network with the Spanish agreements signed between Vodafone, Orange, and MásMóvil and Euskaltel
. (tagsToTranslate) telephone (t) fall (t) 4 (t) 4% (t) lose (t) dimension (t) six euros (t) bank (t) of (t) america (t) lower (t) neutral tip (t) (t) trim (t) 32% (t) target price (t)