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Investing.com - Berenberg initiated coverage on Proximus (EBR:PROX) (OTC:BGAOY) stock with a Buy rating and a price target of EUR11.10 on Thursday, citing approximately 40% upside potential. The telecommunications company, currently valued at $3.24 billion, trades at an attractive P/E ratio of 5.7x and has maintained dividend payments for 21 consecutive years.
The research firm’s analysis suggests investor concerns about new market entrant Digi’s impact on the Belgian telecommunications market have been "overdone" since mid-2022, representing one key pillar of its bullish outlook. This view appears supported by the stock’s strong performance, with a 97% price return over the past six months.
InvestingPro analysis reveals additional insights about Proximus’s potential, with multiple positive indicators suggesting further upside potential.
Berenberg also highlighted that costly fiber network overbuilding in Belgium is increasingly being avoided, which should benefit Proximus’s infrastructure investment efficiency.
The firm expects Proximus’s capital expenditures to decline "materially" from 2029 after having already reached their peak, suggesting improved free cash flow in coming years.
Berenberg’s valuation analysis, using what it describes as a "differentiated EV/BIC framework," indicates Proximus stock is "materially undervalued" compared to its intrinsic worth based on discounted cash flow and sum-of-the-parts methodologies.
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