CHICAGO, June 12, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Telefonica S. A. (NYSE: TEF), China Unicom (NYSE: CHU, France Telecom S.A. (NYSE: FTE), Vodafone Group Plc (Nasdaq: VOD) and America Movil S.A.B. de C.V. (NYSE: AMX).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday's Analyst Blog:
Telefonica to Exit Chinese Assets
Telefonica will sell 1.1 billion shares for a total of €1.13 billion ($1.4 billion). The transaction, awaiting approval from antitrust regulators, is expected to complete by the end of next month. Following the sale, the company will retain a 5.01% stake in China Unicom.
The divestiture is a part of the company's efforts to increase its financial flexibility. Telefonica operates with a high debt level of €57.1 billion as of March 2012 versus €56.3 billion at the end of 2011 and €55.6 billion at the end of 2010. In addition, the company was compelled to plan such a move after an S&P credit rating downgrade last month. The company is also facing the threat of a Moody's downgrade if its debt position does not recover.
According to a Bloomberg report, Telefonica's market share has plunged about €50 billion over the last 18 months. Telefonica is underperforming in its home market and woes are getting deeper with the unresolved Euro-zone crisis. Additionally, Telefonica is exposed to increased churn rates (customer switch) and lower Spanish revenue due to the ongoing reduction in MTRs, which is the fee that operators charge each other to connect calls.
Apart from divesting its Chinese assets, Telefonica is taking various efforts to reduce its debt. Late last month, the company announced its intention to sell its stake in its German unit, O2 Germany, through public share offerings, for €9 billion. Additionally, the company is looking to sell some assets in Latin America through public offerings. Latin American operations include the two largest markets Mexico and Brazil, which are healthy contributors to the company's revenue and earnings.
Elsewhere, Telefonica is restructuring its Colombian business and announced the sale of a 13.23% stake in satellite operator Hispasat SA in February of this year.
We believe this asset-light model would strengthen the company's balance sheet by trimming its debt. These would lead to a €1.5 billion debt reduction this year, which will be 2.35 times of OIBDA compared with 2.63 times at the end of 2011. Such actions will also help in winning back investor confidence and would uplift shareholder returns in the future.
We are maintaining our long-term Neutral rating on Telefonica. But for the short term (1–3 months), the stock retains a Zacks #4 (Sell) Rank.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
SOURCE Zacks Investment Research, Inc.