Altice seems to be in a precarious financial conditions and has lost the faith of investors. Shares have lost 48%, mainly due to the deteriorating KPIs and financial indicators at SFR.
At a recent conference, Patrick Drahi took the helm to try to calm investors but so far, little results. And brokers seem to have conflicting views.
To comfort Altice, ABN Amro’s analysts have issued a « Buy » recommendation on the shares, but not all are convinced. The same day, Credit Suisse also published a report with a Neutral rating, which comes a couple of days after BofAML downgraded the stock.
Here are their arguments.
(DISCLAIMER: This information is not an investment recommendation. It is just given as an information, not an advice. You need to do your own due diligence to see if an investment fits in your Investment Policy Statement, provided you have one).
Continuer la lecture de « Altice: Credit Suisse Stays Neutral, ABN Amro Buys »
From Neal McLeod and team at UBS:
« Our base case: a benign growth and policy backdrop…
We’re forecasting global growth to stabilise at 3.8% (China to slow from 6.8% to 6.4%), the export rebound to slow somewhat, inflation to pick up modestly, the Fed to hike rates three times by end 2018 (from now), US Treasury yields to grind higher to 2.7%, Asia ex Japan currencies to be flat (in equity market cap terms) versus the USD and the Yen to weaken to 122.
Continuer la lecture de « UBS Sees MSCI Asia ex-Japan and TOPIX at 790 and 2,100 Respectively End-2018 »
Per Nick Nelson’s report date Nov 13:
« We recalibrate our top-down earnings model as it had been persistently underestimating the turn in operational leverage. We now see 10% EPS growth in 2018. Consensus estimates are 8.9%, but adjusting for the average upward bias, underlying « true » consensus may be as low as c.2%. We see modest P/E re-rating to 15.7x from 15.0x currently. For the FTSE 100, we are more conservative and target 7,900 end-2018 (c.6% upside). »
« Upside risks: Equities re-rate to previous cycle peak valuations. This would point to c.33% upside from the current levels. European corporates re-gear to US levels. US investors return (net buying peaked in May). European M&A picks up, currently running c.30% below the US. Effective French labour market reform. »
« Downside Risks: Rates and bond yields rise too sharply. But a gradual move would likely be manageable – Europe has very little Tech (6% of index) and a large amount of positively rate sensitive Financials (c.25% of index). Significant Euro strength, on our forecasts (EUR/USD 1.25 end 2018) this is manageable. Higher volatility / political risks in Spain and Italy. »
Jan Loeys has been working as the head of asset allocation for JPMorgan, where he has spent 31 years. He was famously known for the « JPMorgan View » report, published every Friday.
I couldn’t retrieve the apparent last note published but Zerohedge did, so here are some quotes from the full text that you can find there. Continuer la lecture de « Interesting Lessons from Jan Loeys »
US equity market could continue its run next year with the risk that investors fall into euphoria. Continuer la lecture de « Merrill Lynch Sees S&P 500 at 2,800 end 2018… With Some Risks »
Per Bank of America Merrill Lynch report published Nov 21:
« Altice shares have lost 50% of their value post results, while the CDS on the holding have increased by 300bps. Management took action with: 1/ the resignation of the CEO and the return of Patrick Drahi to full control of operations, 2/ admission of poor execution in France, now the #1 focus, and 3/ a priority on debt reduction, involving noncore assets and towers disposals. However, ATC also significantly rebased its midterm expectations on France. Although the steps taken should comfort credit holders, we think the case for the equity is balanced, with long term upside on execution, content monetization and domestic consolidation, but unclear valuation support on our reduced forecasts, and a recovery that remains largely dependent on external competitive forces. Unlike Glencore in 2015, we don’t see material valueenhancing options to drive mid term outperformance and downgrade to Neutral with a PO of €11. Our credit analyst Nick MacDonald is positive on the credit »
And leverage has been building up since the global financial crisis, contrary to most belief. So if you think the streak of bad luck Altice has been facing recently is just a one-off, think again. Continuer la lecture de « Leverage Sets the Stage for the Next Crisis »