MS sees tough competition in Spain telecoms, prefers Zegona over Digi
BUZZ-MS sees tough competition in Spain telecoms, prefers Zegona over Digi ** Competition is expected to remain high amongst Spanish telecommunication companies due to Digi Spain's aggressive growth strategy, Morgan Stanley says
** The brokerage initiates Zegona ZEG.L at "overweight" and Digi Spain DIGIS.MC at "equal-weight" as it considers Digi's "exceptional growth" already reflected in the share price
** "Digi has the better positioned business (but) on current valuations we believe Zegona's 'cash now' proposition offers a superior risk-reward to Digi's 'cash later', MS says
** The brokerage believes Zegona's cashflow generation is "underappreciated", adding that momentum is building for its unit Vodafone Spain
** MS also resumes coverage on Telefonica TEF.MC at "equal-weight" but lowers its PT by about 12% to €3.80
** "To turn more positive on Telefonica we would need to see ... operational improvement in Germany and a stabilisation and return to growth in the UK," MS says
COMPANY | RATING | OLD RATING | PT | OLD PT |
|---|---|---|---|---|
Digi Spain | equal-weight | - | €7.00 | - |
Zegona Communications | overweight | - | 2,200p | - |
Telefonica | equal-weight | equal-weight | €3.80 | €4.30 |
(Reporting by Javi West Larrañaga)
((javier.west@thomsonreuters.com; +34 918 35 61 12))