On Friday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Freenet (ETR:FNTGn) AG (FNTN:GR) (OTC: FRTAF), raising the price target from EUR 34.00 to EUR 36.00 and reaffirming a Buy rating on the stock. This revision follows Freenet's ad-hoc announcement after the market closed, which detailed an increase in its expected FY24E EBITDA and FCF forecasts.
Freenet AG expects its FY24E EBITDA to be in the range of EUR 515-530 million, an improvement from the previous forecast of EUR 500-515 million. Similarly, the company's anticipated FCF for the same period has been revised upward to EUR 285-300 million from the earlier estimate of EUR 270-285 million. These adjustments are attributed to the sale of IP addresses that are no longer essential for the operation of the company's own data center.
The sale of these IP addresses is projected to generate approximately EUR 32 million for Freenet, which will be received in two separate payments. The first tranche, amounting to roughly EUR 18 million, is expected in 2024, while the second, approximately EUR 14 million, is slated for 2025. The revenue from these sales will be realized according to the payment schedule and is to be allocated to the Other/Holding segment of the company.
In addition to the revised EBITDA and FCF forecasts, Freenet also anticipates a moderate increase in its FY24E revenue. Deutsche Bank estimates a year-over-year growth of about 4% for the company. This positive outlook reflects Freenet's strategic maneuvers and financial planning aimed at enhancing its financial position in the upcoming fiscal year.
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