One of the strong news that has been generated in this intense week has been the important, and at the same time, unexpected rise in Telefónica shares. Once known that there has been an agreement regarding the Brexit between Great Britain and the European Union, as well as Italy, can reach an approximation in the elaboration of its general budgets. This news has been very good for the Spanish stock markets and especially for the leading company in the telephony and telecommunications sector.
Within the selective index of national equities, the Ibex 35, there is a winner that stands out above the other values. It is none other than the very declining Telefónica until a few days ago that marked an appreciation in its value in the stock market of almost 5% during this more than interesting week with which the stock market says goodbye to the month of November. Well, one of the clear triggers for this intense action on parquet floors is due to the expectations generated among investors by the sale of assets in Central America. It has been very well received news from all the agents that operate in the stock market.
On the other hand, and as it appears in various specialized media, the national telecommunication company could get in tune 2.000 million euros for them. With which it would have a very favorable impact on the results of your business accounts. Beyond other technical considerations and maybe even from the point of view of its fundamentals. Not surprisingly, it has been the value of the Ibex 35 that has risen the most last Monday, even above the large financial groups.
Telefónica: the news favors it
It is true that the performance this week by the reference telecom has been boosted by a good performance of the main stock market indices. In this sense, it should be remembered that last Monday the Ibex 35 closed at around 9.100 points, after appreciating 1,96%. While on the contrary, the Italian equities it rose even more intensely, specifically 1,45%, the Ftse 100 did so by 1,20% and the Cac 40 of our neighboring France slightly less than 1%. To the surprise of many of the small and medium investors.
With regard to the Spanish telecommunications company, it has been the subject of another far-reaching news item. Not surprisingly, the Dublin Stock Exchange (Ireland) has confirmed that Telefónica has transferred the program of debt issuance that has had so far on the London floor, given the uncertainty posed by the United Kingdom's exit from the European Union (EU). This plan that has come to public light and affects a debt instrument of its subsidiary Telefónica Emisiones, valued at 40.000 million euros and which, from now on, will be listed on the Dublin stock market.
Path of euros per share
In any case, what he has achieved has been to stop his selling current and that has led him to quote very close to 7 euros per share. A level that has not been seen for many, but many years. It is currently trading on the Madrid stock exchange at 7,70 euros per share, although it is true that it should digest and assimilate the significant increases this week. Where it is striking that these have been produced with a significant volume of business. And this aspect gives great validity to these increases in one of the reference values of Spanish equities.
While on the contrary, there are many small and medium investors who have been encouraged to open positions in this value before the low prices with which it traded. Not in vain, some financial analysts were advising last week that it was time to return to the positions of the national telecom. In this sense, it is not surprising that the strong hands of the market have accumulated many titles at the close of Friday of last week. A clue about what could happen days later and after the weekend.
They value their target price at 9 euros
On the other hand, we cannot forget at this time that the target price of the company listed in equities is around the 9 euros per share. This in any case, does not mean that it will necessarily achieve it, but on the contrary it is an estimate assigned by financial intermediaries to carry out operations. Where at some point or other it can quote at these prices that are defined as a target price and that are reviewed from time to time.
On the other hand, it must be considered that this is a market value that not long ago traded very close to the levels of 14 euros per share. It is a price that does not rule out that it will reach it again, although it would be achieved in a medium or long term. The objective in the short is to reach 9 or 10 euros, which represents more than 10% as potential for revaluation from this moment. Beyond other technical considerations and maybe also from the point of view of its fundamentals.
Can the value fall further?
In any case, one of the questions that small and medium investors ask themselves is whether they still have a margin of drop in its price. Well, everything will depend on how the equity markets evolve from now on. Because indeed, if this is negative, there is no doubt that the actions of the Spanish telecom company may go lower. Not much, but at least how to test the support it currently has at 6,20 euros. In any case, the opinion of financial analysts is that the worst in its evolution has already been seen, discounting all the negative news it has generated in recent months.
It is true, on the other hand, that the slowdown in its profits has played against a good evolution in the stock market. In this sense, there will be no choice but to be very attentive to the next quarterly results to determine whether or not it is the right time to open positions in this highly relevant value of Spanish equities. Even through aggressive purchases as a result of the good prices it is currently trading at. Although it may drop a bit more in the coming months.
Strategies with this value
There is a common denominator in the options of the main financial analysts and that is that the shares of this listed company are more targeted at the moment to buy than to sell. Not surprisingly, they are trading at a significant discount in their price as a result of their latest cuts in their valuation. To the point that they point out that it does not represent the real price that the telecommunications company should offer since it has been attacked by the bearish positions with great harshness in terms of the intensity of the movements.
Therefore, to overcome the next support that is very close to 8 euros it would be a very interesting point to open positions with the aim of waiting for increases to 9 or 10 euros and make the savings profitable in a not excessively long period of time. Not in vain, the risks run by small and medium-sized companies are not very high and of course less than in other values of the Ibex 35. In this sense, the equation between profitability and risk It is one of the most competitive currently offered by Spanish equities.
Business operations
Another aspect that will have to be addressed in the coming weeks is that which has to do with the corporate movements of the sector. Not surprisingly, it is expected that there may be important acquisitions, as happened a few years ago. In this sense, all eyes are on Telefónica that could carry out an operation of certain relevance and from which it would benefit. This would undoubtedly be good news for small and medium investors who could see their investments in the stock market increase.
These corporate movements would not only target the countries of their European environment, but also the other side of the Atlantic. Where the role that Telefónica plays is very important, in countries such as Brazil and Mexico. In this sense, it will also be affected by the evolution of emerging markets, in one sense or another. With what its volatility will be much more pronounced and the difference between its maximum and minimum prices will be increased. A factor that will undoubtedly help to make trading operations more advantageous for all investors. As a new strategy to develop investments from a different point of view from now on.