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On Friday, CFRA analyst Adrian Ng adjusted the rating of Telenor ASA (TEL:NO) (OTC: OTC:TELNY), shifting from Buy to Hold while maintaining a price target of NOK145.00. The change reflects a valuation based on an 8.0x 2025 consensus EV/EBITDA, which is above the company’s historical average of approximately 6.5x. According to InvestingPro data, the company currently trades at an EV/EBITDA of 8.37x, with a market capitalization of $17 billion. The stock is trading near its 52-week high, suggesting careful valuation consideration is warranted.
Ng noted Telenor’s attractive dividend yield and business restructuring efforts as reasons for assigning a premium to the historical multiples. InvestingPro data shows the company offers a significant 4.41% dividend yield and has maintained dividend payments for 15 consecutive years, with five years of consecutive increases. The analyst has also revised the 2025 earnings per share (EPS) estimate upwards to NOK8.50 from NOK8.00 and introduced a 2026 EPS forecast of NOK9.50.
Telenor reported that its Q4 2024 total revenue showed little organic change, while service revenues saw a modest increase of 1.1%. The company’s organic EBITDA for the same quarter rose by 2.0%, contributing to a full-year growth of 3.5%, which was in line with expectations for higher-than-proportional EBITDA growth. The company has demonstrated strong momentum, with a year-to-date return of 12.66% and maintains a GOOD financial health score according to InvestingPro analysis.
Looking ahead, Telenor anticipates low single-digit organic service revenue growth in the Nordic region for 2025. Following its divestiture from Asian markets, Telenor is now primarily focused on the Nordic telecommunications sector, with joint venture interests in significant Asian telecom companies such as CelcomDigi and True. As a prominent player in the Diversified Telecommunication Services industry, Ng believes that Telenor’s current business composition warrants a valuation that reflects its nearly exclusive Nordic presence.
In other recent news, Telenor reported its first-quarter financial results, seeing growth in both group and Nordic service revenues. The company’s free cash flow (FCF) exceeded analyst estimates, primarily due to efficient working capital management. However, Nordic service revenues were slightly below estimates, impacted by performance in Sweden. Telenor’s future outlook anticipates low single-digit growth in Nordic services and mid single-digit growth in adjusted EBITDA, in line with consensus estimates.
In a significant development, Bernstein SocGen Group upgraded Telenor’s stock from an Underperform to a Market Perform rating. The revised rating follows a favorable reassessment of the company’s financial forecasts, with increased revenue and EBITDA predictions for 2025 and 2026. The analyst noted that Telenor’s strategic moves in Asia and recent regulatory changes in Norway have resulted in a more favorable competitive environment, which has impacted the company’s financial outlook positively.
These are the recent developments for Telenor, indicating a focus on operational efficiency and shareholder returns, as well as a positive response to the company’s strategic moves and regulatory changes.
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