JP Morgan has upgraded its recommendation for OTE‘s stock to overweight from neutral, following in the footsteps of NBG Securities which had also revised its recommendation on the largest technology company in Greece.
The American multinational finance company, however, has lowered the target price for OTE stocks to €17.3 from €17.7.
JP Morgan explains in its report, that OTE’s shares declined by 5.6% over the past year (sector: +10.4%) due to concerns about the wholesale fiber market and competition, with Vodafone and Nova (owned by the United Group) being significantly cheaper.
Despite this, the multinational company believes investors’ fears are unjustified saying the shares are trading at an appealing, adding that favorable catalysts in the Greek market are expected to boon OTE as it leverages its strong mobile and fixed-line network, especially the increased adoption of FTTH.
Wholesale FTTH revenues represent only 1% of the wholesale segment (accounts for 18% of Greek revenues), so the impact is limited. JP Morgan still expects the wholesale segment to decline in the medium term.
Moreover, as it points out, OTE maintains a solid balance sheet and offers attractive returns for shareholders (TSR yield of 8.6% in 2024), which could rise to 11.1% in 2025 if the proceeds from the sale of the Romanian business are distributed to shareholders.
As a result, JP Morgan upgrades OTE to “overweight”, forecasting higher yields than the market, but lowers the target price to €17.3 (from €17.7 previously).
OTE is the largest technology company in Greece and one of the three largest companies listed in the Athens Stock Exchange.
