French Telecoms Sector Trades Lower After Barclays Downgrade
March 05 2019 - 07:00AM
Dow Jones News
By Patrick Costello
Shares of French telecoms companies fell Tuesday after Barclays
downgraded the sector and cut its estimates and target prices over
a more cautious outlook.
The British bank says the French telecoms market is in need of
prolonged repair after an "irrational" level of promotional
activity in 2018 lowered market return on capital employed, or
ROCE, in the sector to 5%.
While the competitive environment has improved since the third
quarter of 2018, "sustained discipline" on the part of French
telecoms companies remains uncertain, Barclays says.
"In-market consolidation is the best option, we believe, but
appears unlikely short term," Barclays says, adding it adopts a
more cautious view on the sector's trends for 2019.
At 1111 GMT, shares of Altice Europe NV (ATC.AE) traded 9% lower
at 1.88 euros ($2.13), and Iliad SA (ILD.FR) was down 2.2% at
EUR91.26. Bouygues SA (EN.FR) traded 0.7% lower at EUR32.61, while
Orange (ORA.FR) was up 0.7% to EUR13.41.
Barclays downgraded Orange and Iliad to equalweight, slashing
its target price for Orange to EUR16.50 from EUR18.50 and Iliad to
EUR105 from EUR145.
Barclays downgraded Altice to underweight and cut its target to
EUR1.50 from EUR2.80, saying it estimates that the share price
factors in "substantial M&A."
The bank maintained its equalweight rating for Bouygues, noting
"solid momentum" is priced into the share, but it cut its target
price to EUR37 from EUR39.
Write to Patrick Costello at patrick.costello@dowjones.com.
(END) Dow Jones Newswires
March 05, 2019 06:45 ET (11:45 GMT)
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