If there is a value that is the center of predilections on the part of small and medium investors, that is undoubtedly the teleco Telefónica. The telecommunications operator is one of the companies listed in the selective index of national equities with the highest volume of contracts. But that during the last years he has seen with the valuation of his shares has come to be very close to the levels located at 7 euros per share. Against the positions arrived from the most diverse financial intermediaries.
Now one of the keys that Telefónica has is to show whether the listed company will finally be able to tear down the wall that it has at 10 euros. Something that was very unlikely to have from the quotes generated, especially during the last semester of last year. Now one of the doubts that small and medium investors have is whether they will be able to make their positions profitable during this new stock market year. In order to determine if it is convenient enter or exit of stock market operations.
It cannot be forgotten that just a few years ago the price of Telefónica shares was beyond 12 or 13 euros. In other words, the depreciation by investors has been more than evident, with a decline in profitability of more than 30%. To the point that this fact has made the shareholders of this great Ibex 35 company very nervous. Although everything will depend, to a greater degree, on the behavior of the Spanish equity market index. With very promising prospects based on the criteria issued by the most different financial analysts.
Telefónica: business results
A factor that is playing in favor of the interests of the national telecom and that may be the trigger for a new upward trend. In this sense, it should be remembered that one of the most relevant events has been that the quarterly results of this telephone company have clearly shown that the operator maintains a constant rhythm to reduce your debt. It is one of the issues that most concerns investors since it is one of the weak points of one of the specific companies of the Ibex 35. Beyond other technical approaches and even that may also be from a fundamental point of view.
On the other hand, Telefónica has always wanted to reduce debt organically, leaving the sale of assets in the background. This measure has raised that a good part of the investors have returned to the fold of this listed company. Although it will be necessary to foresee how the business results will be that will develop during this new year that has just begun. Because a situation of greater instability in financial markets and that can harm the price of your shares. Something that small and medium investors should have from these precise moments.
In search of the two digits
The main objective of Telefónica's actions in the coming months, and above other considerations, will be to seek and exceed the important psychological level that it has established in the 10 euros for each share. Something that at the moment is not at all clear based on the more irregular behavior that the equity markets present at a global level. Where the debt of this company has been close to 43.000 million euros. In any case, business results have indicated that it has fallen by almost 10% in just one year.
This is good news for your listing in 2019 you can continue climbing positions and finish this stock market course with a positive balance. On the other hand, it is also very convenient to remember that these official data confirm that the telecommunications company is still on the upward path. At least in what refers to the medium and long term, which is a period to which small and medium investors usually go to gradually create a stable savings exchange and at the same time balanced by what it represents in the stock markets. .
Analyst Recommendations
Despite what it might seem at first, the truth is that investors consider that the shares of this telecommunications company are still in an upward cycle, where most financial analysts are inclined to recommend the purchase and offer a target price higher than its current price. With a valuation that is included in levels that they range between 8 and 10 euros per share. Although there are also some that mark it above these margins in their valuation.
Either way, it seems pretty clear that now this is not the time to close positions if it is positioned on the value. Although you may still have a bearish run in the coming months or even weeks. It is difficult to see Telefónica shares for a price lower than 7 euros. As a consequence of this scenario, the investments made in the medium and long term will not offer excessive problems to small and medium investors, who will have a little easier to make profitable their savings from these precise moments. Beyond other technical considerations and maybe even from a fundamental point of view.
Company results
The quarterly results that Telefónica has offered at a more or less level have pleased the financial markets. Because in effect, the benefits have increased compared to the previous year. Although the most relevant data by where the shots can go in the next days or weeks is the one that refers to the fact that the net debt Telefónica has reached 42.636 million euros. This means in reality that it has decreased by 10% compared to just a year ago, although the most interesting thing is that it was reduced for the sixth consecutive quarter. A fact that investors liked a lot.
From which it could develop a bullish rally that would take its titles towards its psychological level, which is established at ten euros per share. Beyond that they can be produced bounces off your price, of greater or lesser intensity. These movements could be used to accumulate positions in the benchmark equity company. And the most interesting thing about this operation is that it could be carried out at a much more competitive price than the one currently quoted. With what its potential for revaluation there is no doubt that it would be higher, in all terms: short, medium and long.
Sale of Antares
Anyway, the latest news that has reached investors is a corporate operation of the member of the selective index of Spanish equities, the Ibex 35. In the sense that Telefónica has reached an agreement with the Western Catalan Group for the sale of 100% of Antares, his personal insurance company for Spain, for a total amount of 161 million euros, as reported to the National Securities Market Commission (CNMV).
The transaction is expected to generate capital gains of approximately 90 million euros for Telefónica and a reduction in net financial debt close to 30 millones de euros. This corporate event has materialized in a rise in the price of its shares, although with an intensity that has not been very intense. When everything seemed to indicate that it could revalue above 4% or even with a more aggressive percentage from which all its shareholders would have benefited.
More optimistic outlook
On the other hand, you cannot forget at this time that this listed company is in a somewhat complex scenario in which its most important objectives are the creation of value and the optimization of the return on the capital employed. Above all other considerations that until a few months ago seemed little less than a priority for his line of business. For this reason, it is not surprising that some financial market analysts have pointed out that it can even double its value sometime in the next few years.
Immersed in a scenario where the president of Telefónica, José María Álvarez-Pallete, today asked for a "global framework" that includes the rights, obligations and values of citizens' data. In relation to the regulatory framework in which the listed company is integrated, since it must be chosen which legal and moral standards should be established in the technological age. This is a factor in which the telecommunication company plays a lot and that can give the odd clue about where the direction is going to go in the price of its listing. Undoubtedly, this year there will be some signals about this important aspect regarding its valuation in the national financial markets. Therefore, you will have no choice but to be very attentive to what has to do with this news from now on. Do not forget.