Downgrading TI to Underperform; TI is likely to remain a value trap
TI has fallen ~23% YTD, underperforming the SXKP by 12%, which itself has underperformed the SXXP by 13%. A quick look at any comp sheet will show you it is trading at around 4.75x EV/EBITDA (Bloomberg) a hefty ~25% discount to peers. So as investors search for “value” one can understand why TI often comes up. However our latest work on The Future of Fibre (published today) has led us to challenge our own long term growth assumptions for TI. In short we have
become significantly more bearish, leading to significant cuts to our medium term estimates. We cut our price target from EUR0.60 to EUR0.38 (c30% downside) & downgrade TI to Underperform.