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Investing.com - Citi downgraded Megacable Holdings (MEGACPO:MM) (OTC:MHSDF) from buy to neutral on Friday, while simultaneously raising its price target to 55 pesos from 53 pesos.
The Mexican cable operator’s shares have surged 62% year-to-date, significantly outperforming the S&P/IPC index’s 14% gain during the same period, according to Citi’s analysis.
Citi noted that the market is now pricing Megacable as a stable free cash flow to equity and dividends case following what it described as the "thus far successful execution" of the company’s expansion plan.
Despite trading at what Citi considers a relatively inexpensive 4.0x next-twelve-months enterprise value to EBITDA ratio compared to historical standards, the firm believes Megacable’s upside potential is now limited.
Citi indicated that without sector consolidation in what it characterized as a three-player market, Megacable’s significant recent share price appreciation has largely captured the company’s near-term growth potential.
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