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BofA maintains a Buy rating on Orange despite a 13.7% drop in 2 weeks; Target +38%

Published 2024/06/17, 13:54
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Investing.com - The stock of the French telecom operator Orange SA (EPA:ORAN), which is also a component of the CAC 40 index, has not been spared from the drop in French stocks, weighed down by political uncertainty related to the dissolution of the National Assembly.

Indeed, the stock lost 7.65% last week, adding to a 6.2% decline the previous week, resulting in a 13.4% loss over the past two weeks.

In addition to political uncertainty, Orange's stock is also affected by concerns over competition following aggressive pricing changes in mobile telephony by another major French operator, SFR (EPA).

However, in a note published this Monday, analysts at Bank of America (NYSE:BAC) estimated that the stock could see a strong rebound, reaffirming their buy recommendation.

Regarding competition from SFR, BofA analysts noted that mobile telephony represents 11% of the group's revenue, but they believe that Orange's leading position in terms of quality should mitigate the impact of SFR's price cuts.

Furthermore, they believe that more favorable pricing trends in the high-speed internet segment, with the transition to fiber optics, should continue.

Finally, despite their positive view, BofA analysts have slightly lowered their earnings per share (EPS) forecasts for the company, leading them to slightly reduce their price target from €13.30 to €12.90, which still translates to an upside potential of 38.85% from last Friday's closing price.

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