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It is one of seven European companies to get the maximum price for the revaluation prospects.
Telefónica receives for the first time the five-star rating that the Morningstar company attributes to the most highly rated companies in relation to their long-term intrinsic value (objective). It thus becomes the only Spanish value with five stars. BBVA, Grifols and Prosegur have four (see graph attached)
The operator had four stars up to now, but the decline of more than 11% has suffered between May and June, which took Telefónica to its lowest level since December. 2016, its revaluation potential has increased and experts believe that the weakness is not justified.
Despite the latest rebound, Telefonica yields 5% on the stock market so far this year. Morningstar badysts rate the company at 13 euros, 68.6 percent higher than Friday's close and more than 9.5 euros in badyst consensus. "Telefónica is the leader in the European converged services market, and is expanding fiber to better compete with cable operators in providing fixed broadband services," they explain in Morningstar.
The Spanish company has acquired E-Plus in Germany and GVT in Brazil, It strengthens its position in both countries and offers many opportunities for savings.We do not believe that the market appreciates the good position of the company. business and growth opportunities margins, says Morningstar. "While we would have liked to see the company sell its business in the UK, in order to get out of the market more competitive and reduce debt, it's still a good deal "He believes that Telefónica has other alternatives to reduce its debt, although nothing is as easy as selling this badet."
In addition to Telefónica, six other European securities ens get the top rating from Morningstar. British American Tobacco (BAT) and GEA Group, which won a star, and others who were already on the list, such as Roche Pharmaceutical, AB Inbev Brewery, BT and Imperial Brands
. The German GEA, which supplies food and dairy processing equipment, which can rise 74% to 47 euros, offers a greater potential for re-evaluation. "Given that GEA is one of the world's leading suppliers, it will benefit in the long run from increased demand for food production to feed a growing world population," comment the experts. It has a market capitalization of nearly 4.900 million.
As for BT, it can also be reevaluated at over 55.85%, up to 360 euros. Morningstar recognizes that values that reach five stars do not all benefit from a broad competitive advantage and recognizes that BT is one of those with a limited benefit.
Experts continue to maintain their confidence in the shares of brewer AB InBev, which is worth more than 179,000 million euros on the stock market and yields 4.7% in 2018. Morningstar sets valuation at 106 euros per share. action, against 88.8 that ended Friday, the World Cup supporting consumption on the rise
What conditions must be met
Four factors explain why Morningstar awards the stars:
Identify and evaluate the competitive advantage of the company.
Estimate the value with: a discounted cash flow model.
They evaluate the level of uncertainty surrounding the business (low, medium, high, very high or extreme). The greater the uncertainty, the greater the margin of safety must be requested
The rating is calculated on the basis of the difference between the price and the company's value corrected for uncertainty. If this is high, your stock should be priced at less than your objective rating of more than 40% to get five stars. And 20% if it is weak.
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