Will Telefónica go up 40% in the Stock Market? I could make it even more

This week, Bank of America analysts placed the telecom’s target price at 5.2 euros, giving the company a potential upside of 40%. Some experts consider that the value of Telefónica is even higher, so that the trip on the stock market could be greater.

In the opinion of Sergio Avila, IG analyst, Telefónica shares They are undervalued, “even more than 40%”, and he affirms that the intrinsic value of the securities would be 8.90 euros, despite the fact that “it is having a hard time maintaining the upward trend”.

Avila likes the company “it’s cheap and the trend is upward.” On the contrary, he plays that the price of Telefónica “moves very slowly”, in addition to, of course, the levels of debt, which in his opinion “is what pulls investors back when it comes to positioning themselves in the value ”.

The expert shows positive with Telefónica on the Stock Market, despite the fact that at IG they expect revenues to fall this year about 6% compared to last year. On the other hand, profits could have increased by 29%.

At a technical level, Ávila places Telefónica’s most important support at 3.52 euros. “Not losing it would be good news that could make the price start again towards the top of the channel in which it is listed, around 4.24 euros per share.”

Telefónica marks prepandemic levels at 6.50 euros per share. Until he gets there, he still has a long way to go. An upward path that would mean a return of 74%. “If it continues to comply with the roadmap that has been set, it can have a very outstanding evolution in 2021 and 2022,” he explains Álvaro Climent, independent analyst.

Sara Carbonell, CEO of CNMC Markets in Spain, emphasizes the importance of 4 euros for Telefónica, for coinciding in that price several factors. First of all, it is the target price that they give you on Morningstar giving you a target price of 4 euros.

Secondly, Carbonell explains in a medium-term analysis, the first resistance is at that level, also coinciding with the 61.8% Fibonacci of the entire fall since May 2020. If this level is exceeded, the next resistance will be would find at 4.17 euros. “If it closed above it, it would give us a signal of momentum. I think it can have potential ”, he adds.

Telefónica’s debt

Meanwhile, the value continues in its debt reduction process, one of the slabs for its price, in line with what the market and analysts have been demanding since 2019. Thanks to the latest sale of the fiber network to Chile by 500 million the debt will decrease by another 400 million. “This will allow to continue reducing the leverage and place it below 2.4 x ebitda, improving the comparison with its main European competitors”, emphasizes Climent.

Telefónica’s titles accumulate a 20% annual revaluation. If the evolution from the lows of November 2020 is measured, the revaluation of its shares reaches 34%.

“If it continues to carry out operations to enhance its business and divest non-strategic assets, it can continue on the good path it has taken this year,” says Climent, without forgetting either “the potential operations corporations in the sector, which have always haunted Telefónica and even more so at current price levels ”.

Carbonell also considers that Telefónica has a long way to go on the stock market and underlines the merger of the British subsidiary, O2, with Virgin, “which in recent years was what penalized it the most”, and exposure that the company has to other countries, something that in many cases it has also harmed it and that now, due to the exchange rate, it can benefit it.