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On Monday, HSBC analyst Madhvendra Singh upgraded America Movil shares, trading on the New York Stock Exchange (NYSE:AMX), from Hold to Buy. The price target was also increased to $17.50, up from the previous $15.50. Currently trading at $14.19 and near its 52-week low of $13.10, the stock appears undervalued according to InvestingPro analysis. Singh’s analysis suggests that America Movil is positioned to gain from a possible positive shift in Mexico’s market valuation, which is anticipated by HSBC’s strategy team.
Mexico, being the largest contributor to America Movil’s equity value at approximately 45%, plays a significant role in the company’s financial health. With a market capitalization of $42.87 billion and total EBITDA of $16.5 billion, the company has demonstrated solid financial performance, achieving 6.52% revenue growth in the last twelve months. In 2024, Mexico accounted for about 36% of service revenues, 38% of total revenues, and 41% of EBITDA for America Movil. Although Singh forecasts that America Movil’s growth in Mexico might face challenges in 2025 due to macroeconomic weaknesses affecting prepaid and enterprise revenues, there is an expectation of a recovery towards the end of the year. Get deeper insights into AMX’s financial health and growth potential with InvestingPro, which offers exclusive analysis and 10+ additional ProTips.
The upgrade in the stock rating reflects an optimistic outlook on America Movil’s future performance, particularly in its primary market. Singh notes that despite potential short-term pressures, the company’s growth trajectory is expected to improve by the end of 2025. This positive forecast is further supported by HSBC’s decision to increase the target multiple for Mexico operations to 7 times from the prior 6.5 times, indicating a higher valuation for America Movil’s business in Mexico.
The revised price target and upgrade to a Buy rating are based on the anticipated benefits from Mexico’s market re-rating and the company’s robust contributions from its Mexican operations to its overall financial results. HSBC’s analysis points to a more favorable macroeconomic environment on the horizon, which could enhance America Movil’s performance and justify the elevated target multiple for the company’s Mexico-based activities.
In other recent news, América Móvil reported strong financial results for the fourth quarter of 2024, highlighting significant subscriber growth and increased revenue. The company surpassed 400 million access lines and saw a notable rise in postpaid subscribers, particularly in Brazil, Colombia, and Mexico. América Móvil’s revenue reached 237 billion pesos, an 18% increase from the previous year, with service revenue and EBITDA also experiencing substantial growth. Despite a decrease in net income due to higher financing costs, the company’s operating profit rose by 11% to 46.4 billion pesos.
In another development, Mexico’s telecom regulator, the Federal Telecommunications Institute, canceled the IFT-12 multi-band tender for 5G spectrum, a move that analysts from Jefferies suggest could strengthen América Móvil’s Telcel dominance in the market. The cancellation aligns with regulatory reforms under the Sheinbaum administration, potentially impacting the sector’s development and investment in network coverage. Jefferies notes that Telcel has already rolled out 5G in its primary markets and has limited immediate need for additional spectrum. With low debt levels and no mergers or acquisitions anticipated, América Móvil might focus on increasing its share buyback program.
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