Iliad May Run Out of Steam as Valuation Peaks Too Soon: Natixis
Iliad’s high valuation is being driven by the potential offered by the Italian market, yet there are unlikely to be any announcements regarding it until end of 2017 at the earliest while its growth in France is set to slow, Natixis says, downgrading stock to neutral from buy.
- Notes that Iliad is trading near all-time highs on several multiples
- “The high valuation itself may be warranted, but not so much the timing”
- In mobile, co. has benefited from price gap to competitors as well as SFR’s structural problems, both of which will gradually wane
- In broadband, co. is likely to capture a smaller share of new adds as the main driver is now fiber, where Iliad has a smaller base; Natixis also sees risk that Ebitda margin could disappoint with growth in sales driven by content
- NOTE: Iliad is up 21% YTD, outperforming Stoxx 600 telecom index’s 4.2% gain; stock fell below 50-DMA on Monday for the first time since December