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On Thursday, JPMorgan analyst Marcelo Santos increased the price target for Millicom International Cellular SA (NASDAQ:TIGO) shares, lifting it from the previous $33.00 to $41.00. The Overweight rating on the stock was reaffirmed by the analyst. The revision in the price target is primarily attributed to adjustments in the company’s capital expenditure projections and a reduction in the weighted average cost of capital (WACC). The company, currently valued at nearly $5 billion in market capitalization, has shown impressive momentum with a 50% return over the past year, according to InvestingPro data.
Santos noted that the revised estimates for Tigo reflect a more strategic approach to investment, leading to lowered short-term and long-term capital expenditures. The new price target represents a 39% potential upside from the current level, in addition to an 11% yield from dividends. This update comes as Tigo is recognized for having the highest free cash flow (FCF) yield among Latin American telecommunications companies, projected at 15.0% for 2025. InvestingPro analysis shows the company maintains a "GREAT" overall financial health score, with particularly strong performance in price momentum and relative value metrics.
The company is also known for its substantial return of capital to shareholders, with dividends and some buybacks amounting to a total yield of 13.1%. Furthermore, Tigo’s stock liquidity has seen a significant increase, approximately fourfold, following the delisting of its Swedish Depository Receipts (SDRs). According to Santos, these factors contribute to making Tigo the top pick among Latin American telecommunications stocks.
In summary, JPMorgan’s enhanced price target for Millicom International Cellular SA reflects a positive outlook on the company’s financial strategy and market position. The firm’s focus on reducing capital expenditures and its strong free cash flow yield, coupled with an attractive dividend yield and improved liquidity, provide the basis for the analyst’s optimistic stance on the stock.
In other recent news, Telefonica (NYSE:TEF) has announced a significant move to sell its Colombian business to Millicom Spain for $400 million. This transaction, which involves Millicom acquiring 67.5% of the share capital of Colombia Telecomunicaciones, is still awaiting regulatory approval. Telefonica’s decision to offload its Colombian operations is part of a broader strategy to reduce its footprint in the Latin American market. Meanwhile, Millicom has been the focus of analyst attention, with Morgan Stanley (NYSE:MS) initiating coverage on Millicom International Cellular SA with an Equalweight rating and a price target of $32.00. The firm highlighted potential market consolidation in Colombia as a key factor for future momentum. Additionally, Millicom’s announcement to resume regular cash dividends has caught investors’ attention. The company plans to sustain or grow its dividends annually, reflecting a strategy to balance shareholder returns with maintaining a stable capital structure. These developments underscore Millicom’s strategic focus on strengthening its financial position in the Latin American telecommunications sector.
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