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On Friday, Macquarie analysts adjusted their stance on Singapore Telecommunications Ltd. (ST:SP) (OTC: SGAPY), downgrading the stock from Outperform to Neutral, despite a price target increase to SGD3.60, up from SGD3.37. The revision reflects a cautious outlook on the company’s immediate share price potential, despite acknowledging improvements in its core businesses. According to InvestingPro data, the stock has delivered an impressive 51.68% return over the past year and is currently trading near its 52-week high of $26.75.
The analysts noted that SingTel’s key segments, SingTel SG and Optus, have demonstrated consistent advancements. However, the stock’s valuation appears to be more closely aligned with the growth in the value of its associate, Bharti Airtel (NSE:BRTI), rather than the progress within its own operations. The upgrade in the price target from SGD3.37 to SGD3.60 suggests that the analysts see some inherent value in the company that has not yet been fully recognized by the market. The company, with a market capitalization of $40.65 billion, maintains a healthy dividend yield of 4.87% and has maintained dividend payments for 20 consecutive years, as revealed by InvestingPro analysis.
The Macquarie team expressed the view that without new catalysts to drive momentum, SingTel’s share price might experience a period of stagnation. This perspective led to the decision to downgrade the rating to Neutral, indicating that they do not foresee significant share price movement in the near term.
Despite the downgrade, the analysts conveyed a belief that there is still considerable value within Singapore Telecommunications Ltd. that has yet to be unlocked. This sentiment offers a glimpse of potential for the company, even as the analysts project a pause in the stock’s price trajectory.
The adjustment in SingTel’s stock rating and price target by Macquarie analysts comes at a time when investors are closely monitoring the telecom sector for growth opportunities and signs of stabilization in core business segments.
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