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On Thursday, Deutsche Bank (ETR:DBKGn) analysts increased their price target on Tele2 (ST:TEL2b) AB (TEL2B:SS) (OTC:TLTZY) shares to SEK119.00, up from the previous SEK105.00. The firm, however, has chosen to maintain a Hold rating on the stock. The adjustment reflects the analysts’ view that Tele2’s 2025 EBITDA growth rates are likely to benefit from the company’s intensified focus on operational expenditure (opex) reduction. This includes a significant workforce reduction of 15% and the possibility of further savings.
The analysts noted that while these cost-cutting measures are supportive of growth, they may be essential to offset weaker service revenue trends. In addition, they pointed out that the company’s shares have undergone a re-rating, with a 2027 expected free cash flow (EFCF) yield of 7.0% and an unlevered free cash flow (FCF) yield of 6.3%. This re-rating reflects a change in the market’s valuation of the company’s future cash flows.
The Deutsche Bank team’s forecasts for the first quarter are generally in agreement with the consensus. They expect the results, which are due to be released on April 23, to align closely with market expectations. The analysts have taken a cautious stance, suggesting that while Tele2 is making strides in reducing costs, the benefits may be balanced out by the challenges in revenue generation.
Tele2’s strategic moves to streamline its operations and improve efficiency appear to be a key component of the company’s plan to enhance its financial performance. The workforce reduction and potential for additional savings are central to this strategy, as the company aims to position itself for sustained growth in the coming years.
The market will be watching closely when Tele2 reports its first-quarter results, to see whether the company’s performance aligns with Deutsche Bank’s predictions and the broader market consensus. The updated price target from Deutsche Bank provides investors with a revised expectation of the stock’s value based on the anticipated impact of the company’s cost-saving initiatives and current market conditions.
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