On Friday, Tele2 (ST:TEL2b) AB (TEL2B:SS) (OTC: TLTZY) stock experienced a shift in rating as Berenberg changed its position from Hold to Sell. The firm simultaneously increased the price target for Tele2 to SEK93.00, up from the previous SEK86.00.
The decision by the firm comes amid expectations of strong second-quarter results for Tele2, with projections suggesting that the company's full-year guidance may tighten towards the higher end of the spectrum.
This anticipation builds on recent positive trends in Swedish mobile pricing and overall service revenue growth, as well as macroeconomic factors and internal improvements within the company.
Despite these favorable short-term prospects, a recent survey conducted in May 2024 has prompted some skepticism regarding the long-term revenue growth forecasts for the Swedish mobile service sector. The survey, which gathered insights from 1,000 Swedish mobile users, indicates potential challenges to the optimistic outlook for sustained revenue growth beyond 2024.
Berenberg's analysis suggests that the current market valuation of Tele2 may not fully account for these concerns, leading to the downgrade. In contrast, the outlook for Telia (ST:TELIA) remains unchanged, with Berenberg maintaining a Hold rating for the company.
The adjustment in Tele2's stock rating and price target reflects a nuanced view of the company's market position, balancing the positive short-term indicators against the uncertainties highlighted by consumer survey data. The market will be watching closely as Tele2 approaches its upcoming quarterly financial report.
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