On Thursday, JPMorgan (NYSE:JPM) issued a downgrade for Proximus (PROX:BB) (OTC: BGAOY) from Overweight to Neutral, adjusting the price target to €8.60 from the previous €13.00. The revision comes as the firm reassesses the potential catalysts previously expected to enhance the stock's value.
The analyst at JPMorgan had initially recommended an Overweight rating in 2024, anticipating a series of developments that could lead to a higher valuation for Proximus. These developments included the merger of TeleSign and Route Mobile, a possible deal between Proximus and Telenet concerning fibrecou, and insights into Digi's strategy for entering the Belgian mobile market.
However, the guidance for Proximus' CPaaS merger turned out to be less favorable than anticipated, and the fibrecou has resulted in significant downgrades to the company's estimated future cash flows. Due to these factors, the analyst no longer maintains the confidence necessary to support the previous Overweight rating.
While there is a possibility of substantial gains from the Fiberklar deal, the analyst notes that any benefits would only become evident in the long term, once the associated capital expenditures normalize. This timeline extends beyond the investment horizon of most investors, leading to the decision to revert to a Neutral stance on Proximus shares.
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