Looking at foreign telecoms in a tough macroeconomic backdrop, Barclays is cutting its ratings on a pair that it says has limited pricing power.
That's due to limited ability to pass along cost increases in Italy, Greece, and Spain, he said, thanks largely to high competition, macro uncertainties or a combination of those factors.
Inflation will land harder on Vodafone (VOD) than most telecoms, he said, with only the UK likely to see material price increases over the next couple of years among Vodafone's four biggest European markets. As for Hellenic Telecom (OTCPK:HLTOY), Greece is more likely than others to see impact from an economic slowdown.
Turning to France among Europe markets, Patrick and team said that four market players is an unstable equilibrium that has "proved rational"; they've upgraded Orange (ORAN) to Equal Weight from Underweight. And as for the Nordics, Patrick boosted Telia (OTCPK:TLSNY) to Overweight from Equal Weight due to those countries' positive price inflation trends.
He's cut his price target on Vodafone to 140 pence a share, vs. today's close of 126.26 pence. And he's cut Hellenic's target to €17 from €19 (vs. today's €16.20).
Orange gets a target bump to €10.5 from €9.5 (vs. today's Paris close of €11.12), and Telia is boosted to 50 kronor from 45 (vs. Stockholm's close of 39.45 kronor).