Quick summary of analyst downgrades to France Telecom (FTE) following FTE's second revision to earnings guidance since October:
Goldman Sachs' Sonalee Parekh downgraded from "in-line" from "outperform" amidst concerns about the lack of detail in the warning. "Even on much lower forecasts, France Telecom still looks inexpensive, but in our view the combination of uncertainty and poor management credibility are likely to keep the stock from performing well, at least until the fiscal year results."
Morgan Stanley downgrades FTE to equalweight from overweight, reducing target price to EUR26.50 from EUR23. "Typically we would not reduce a rating on a profit warning, as the market tends to price-in the new news very quickly, and this has been the correct relative approach...we are concerned by ongoing capex risks, and ongoing risks given the group's lack of payroll cost flexibility in a deflationary industry."
HSBC reduces FTE's fair value range to EUR22.8-EUR25.2 per share from EUR27.3-EUR30.1. Notional price target lowered to EUR24 from EUR28.7.
Man Securities analyst Martin Mabbutt keeps Buy rating but cuts target price to EUR26 from EUR29.5. FT is paying the price for earlier optimism "with a comprehensive destruction of what was very strong investor support."
WestLB downgrades from outperform to neutral, with target price from EUR26 to EUR21.