On Friday, Hellenic Telecommunications Organization (HTO:GA) received an upgrade in its stock rating from Neutral to Buy by BofA Securities. The firm also increased the company's price target to EUR18.20, up from the previous EUR15.70. This change reflects a positive outlook on the company's future financial performance and market position.
The upgrade comes on the heels of several operational developments that BofA Securities believes will benefit Hellenic Telecommunications. The analyst identified three key operational tailwinds: the FTTH voucher system, the OTE-Nova Agreement, and the optimization of FTTH wholesale operations. These factors are anticipated to drive the company's growth and enhance its market standing.
BofA Securities also highlighted Hellenic Telecommunications' robust free cash flow (FCF) generation and its impressive shareholder remuneration policy. These financial strengths are seen as indicators of the company's solid performance and potential for sustained profitability.
The firm's analyst expects that these positive developments will lead to consensus upgrades, with BofA Securities' own estimates for 2025/26 earnings per share (EPS) being 6.6% and 5.3% higher than the current consensus. This projection is based on the anticipated impact of the mentioned operational tailwinds on the company's earnings.
Lastly, the valuation of Hellenic Telecommunications was considered attractive by the analyst, who cited the increased EPS forecasts and a reduced weighted average cost of capital (WACC), which was adjusted from 9.7% to 8.3%. This lower WACC contributes to the raised price target, as it impacts the company's cost of operations and investment.
The upgrade by BofA Securities suggests increased confidence in Hellenic Telecommunications' capacity to outperform in the market, backed by solid operational strategies and financial policies. The new price target of EUR18.20 represents the firm's revised expectations for the company's stock performance.
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