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Investing.com - UBS initiated coverage on Telecom Argentina (NYSE:TEO) with a Buy rating and a $17.00 price target on Monday. The stock is currently trading at $11.25, representing a potential 51% upside to UBS’s target for the $5 billion market cap telecom operator.
The firm identified Telecom Argentina as the largest telecom operator in Argentina, with additional operations in Paraguay and Uruguay. UBS noted that macroeconomic and political volatility has widened TEO’s EV/EBITDA discount to Latin American peers to 40%, as it currently trades at approximately 3x 2026E EV/EBITDA. InvestingPro data shows TEO’s current EV/EBITDA ratio at 9.17x based on last twelve months EBITDA of $1.06 billion.
According to UBS, the market appears to assume limited cash generation growth for the company, while the investment bank believes multiple levers exist to unlock value. These include pricing power, operating efficiency, declining capital expenditure intensity, lower financing costs, and potential integration synergies.
UBS expects that as free cash flow becomes more visible, investors will likely reframe their valuation of Telecom Argentina on a free cash flow yield basis rather than current metrics. This view is supported by InvestingPro data showing TEO’s current free cash flow yield at 7%, with levered free cash flow of $432.64 million for the last twelve months.
This perspective shift could support a re-rating of the stock, according to the UBS analysis, potentially closing some of the valuation gap between Telecom Argentina and its regional peers. InvestingPro data shows TEO has delivered strong returns over the last three months, and investors should note the company will report its next earnings on November 6, which could be a catalyst for the stock.For investors interested in a deeper analysis of Telecom Argentina’s valuation and growth prospects, InvestingPro offers a comprehensive Research Report on TEO, one of 1,400+ US equities covered with detailed expert analysis and actionable intelligence.
In other recent news, Telecom Argentina reported its Q2 2025 earnings, which revealed a narrower-than-expected loss per share. The company’s earnings per share came in at -$0.0378, surpassing the forecast of -$0.074 by 48.92%. However, the company experienced a revenue shortfall, generating $1.45 billion compared to the anticipated $1.65 billion, marking a 12.12% negative surprise. In other developments, Morgan Stanley upgraded Telecom Argentina from Underweight to Equalweight, raising its price target from $7.00 to $11.00. This upgrade reflects Morgan Stanley’s view that recent electoral results in Argentina have reduced macroeconomic risk, improving the risk-reward profile for the telecommunications company. These recent developments provide investors with crucial insights into Telecom Argentina’s financial and market positioning.
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