Bank of America just raised its EUR/USD forecast
Investing.com - Scotiabank (TSX:BNS) has raised its price target on Millicom International Cellular SA (NASDAQ:TIGO) to $46.10 from $37.00 while maintaining a Sector Perform rating. According to InvestingPro data, TIGO is currently trading near its 52-week high of $45.51, with the stock showing remarkable momentum, having gained over 90% in the past year.
The telecom company faces significant debt increases, with Scotiabank projecting a 74% rise in net debt resulting from four major acquisitions including UNE-EPM, Coltel, TEF Ecuador, and TEF Uruguay. InvestingPro analysis reveals a debt-to-equity ratio of 2.25, though the company maintains a healthy EBITDA of $2.4 billion and offers a substantial 6.7% dividend yield.
Scotiabank notes that provisions were established to ensure the merger with Coltel can proceed even if TIGO fails to acquire the 50% stake in TIGO Colombia held by UNE-EPM, though future synergies would need to be shared with Medellin’s municipality.
The firm expects the $100 million EFCF contribution from newly acquired operations to be partially offset by a $75 million spectrum provision in Ecuador, while highlighting challenges in Paraguay and Nicaragua where TIGO’s market position may be weakening.
Scotiabank projects $854 million in EFCF for Millicom in 2026, representing an 11.4% yield, as the company will need to implement immediate turnaround strategies in markets where Telefónica is departing.
In other recent news, Millicom International Cellular reported second-quarter earnings that surpassed analyst expectations, with earnings per share (EPS) of $4.03, exceeding estimates by $3.49. However, the company’s revenue fell slightly short of forecasts, coming in at $1.37 billion compared to the anticipated $1.4 billion. The quarterly performance was bolstered by approximately $590 million in net profit from infrastructure transactions, leading to a total net profit of $676 million for the period. Despite this, revenue declined by 5.9% compared to the previous year, although it showed a 1.9% increase on an organic basis. Additionally, Millicom has reached a strategic agreement with Empresas Públicas de Medellín (EPM) to advance the merger of Tigo-UNE and Colombia Telecomunicaciones (ColTel) operations in Colombia. As part of the agreement, Millicom has committed to presenting an offer in EPM’s Law 226 sale process, with a minimum price of COP$418,741 per share for Tigo-UNE, totaling approximately $520 million. These developments highlight Millicom’s ongoing strategic initiatives and financial performance.
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