Barclays Does Not Settle On Target Price For Telefonica

Telefonica ever closer to selling its Central American subsidiaryJosé María álvarez-Pallete, CEO of Telefonica

Mari Pinardo | In three months, Barclays has cut its price target for Telefónica on four occasions, from 9,8 euros/share in December to 9 euros/share last time round, on March 19. That’s almost 10% lower. How can a company’s value change so much in such a short space of time?

Last December, the UK firm raised its price target for Telefónica to 9.8 euros/share (16% higher than the share price at the time), only to cut it later on January 5 to 9.4 euros/share. It lowered it again on January 19 to 9.3 euros/share and then once again last Monday to 9 euros/share, 19.3% higher than yesterday’s share price (7.76 euros/share, accumulating a drop of 2% over the day). That said, Barclays is still keeping its Hold recommendation on the stock, along with 15 other firms out of the almost 40 which cover the company, according to Factset.

Other companies which provide valuations cited by Bloomberg have a target price for Telefónica which varies between the 8,70 euros/share of Exane BNP Paribas with a Neutral recommendation, the 9,60 euros of Raymond James and BBVA (both with a recommendation of “market outperform” to the 11 euros with a Buy recommendation of Berenberg, very much in line with the price target of our March Consensus (11,02 euros/share).

In total, according to the consensus taken by Bloomberg of the almost 40 firms which have a valuation on Telefónica, 51.3% have a Buy recommendation on the stock, 38.5% have a Hold and 10.3% a Sell.

Under pressure because of the amount of debt on its balance sheet (44.23 billion euros at end-2017), the company seems to be reflecting the doubts over whether the current chairman, José María Álvarez Pallete, can cut the debt.

With a market capitalisation of 40.28 billion euros, Telefónica has accumulated a decline in its share price of 4.185% so far this year (it ended 2017 at 8,12 euros/share), compared with a 4.1% drop in the Ibex 35.


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