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On Friday, Citi analysts revised their price target for Deutsche Telekom (DTE:GR) (OTC: OTC:DTEGY), reducing it to €39.00 from a previous €40.00, while maintaining a Buy rating on the company’s shares. The $177 billion telecommunications giant, which has delivered an impressive 52.78% return over the past year, faced several challenges in its fourth-quarter earnings report released last week. According to InvestingPro data, the company maintains a "GREAT" financial health score, suggesting strong fundamentals despite near-term headwinds.
According to Georgios Ierodiaconou of Citi, the telecom giant’s Q4 financial results were somewhat muddled due to factors such as handset sales and IT business phasing affecting revenue in Germany, a weaker-than-expected performance in German broadband net additions, and complexities in guidance comparisons due to foreign exchange (FX) considerations and the differences between US GAAP and IFRS accounting standards. Despite these challenges, the company maintains robust financials with a healthy free cash flow yield of 18% and has consistently paid dividends for 21 consecutive years.
Despite these headwinds, the analysts made only minor modifications to their forecasts for Deutsche Telekom, primarily attributing changes to FX impacts. The analysts highlighted Deutsche Telekom’s strong execution history and the potential for significant multi-year earnings per share (EPS) growth. They noted these attributes make the company a standout in the telecommunications sector.
However, the analysts also acknowledged the current macroeconomic volatility and Deutsche Telekom’s financial leverage, which stands at 2.78 times net debt to EBITDA, along with the company’s exposure to FX fluctuations.
In reiterating the Buy rating, Citi’s analysts expressed continued confidence in Deutsche Telekom’s prospects but adjusted the price target to reflect the recent challenges and market conditions. The revised price target of €39.00 represents a slight decrease from the previous target, aligning with the updated assessment of the company’s performance and potential risks.
In other recent news, Deutsche Telekom has seen a series of updates from various financial analysts regarding its financial prospects and stock ratings. Deutsche Telekom’s U.S. subsidiary, T-Mobile US (NASDAQ:TMUS), reported impressive fourth-quarter results with a 7% increase in revenues, a 10% rise in EBITDA, and a 54% jump in earnings per share (EPS) year-over-year. This performance has led JPMorgan to maintain an Overweight rating for Deutsche Telekom, with a price target of EUR 43.00, highlighting T-Mobile US’s growth and potential mergers and acquisitions.
Additionally, Citi analysts have increased Deutsche Telekom’s price target to EUR 34.00, maintaining a Buy rating, citing adjustments in financial models and favorable currency exchange rates. Bernstein also raised its price target to EUR 38.00, reaffirming an Outperform rating, based on the company’s strong growth outlook in the U.S. and strategic moves like the recent deal with UScellular. UBS upgraded Deutsche Telekom to a Buy rating, increasing the price target to EUR 33.00, noting the company’s robust exposure to the U.S. market and potential growth catalysts.
These developments underscore Deutsche Telekom’s promising financial performance and strategic positioning, particularly through its subsidiary, T-Mobile US, which continues to exhibit strong growth and potential for further expansion.
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