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On Tuesday, Redburn-Atlantic revised its stance on Telia Co AB (ST:TELIA:SS) (OTC:TLSNF), downgrading the stock from Buy to Neutral, while slightly increasing the price target to SEK39.80, up from the previous SEK38.40. The adjustment comes after the telecommunications company made significant strides in restructuring its operations over the past two years.
Telia Co AB has notably sold off non-core and underperforming assets, streamlined its cost structure, and reduced its workforce by 15%. The company also halved its vendor finance obligations and refined its free cash flow (FCF) definition, setting a new standard in the sector by incorporating an annual spectrum adjustment.
According to Redburn-Atlantic, Telia has established itself as a reliable source of income, and there remains much to appreciate about the company’s performance and strategic moves. Nonetheless, the firm identified several challenges ahead for Telia, including foreign exchange headwinds and concerns about growth in the Norwegian and Finnish markets.
With Telia’s stock now approaching the updated price target, which is within 8% of the current trading price, Redburn-Atlantic believes that the investment case for a Buy rating has largely been realized. This assessment has prompted the firm to adopt a more cautious Neutral rating on the stock moving forward.
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