Throughout the year, the telecommunications sector has been considered one of the main beneficiaries of rate expectations, which has proven true in these almost nine months of the year by becoming the third most bullish sector on the entire continent, surpassed only by healthcare and banking.
The sector index that groups together companies dedicated to telecommunications in Europe, including both traditional operators and owners of pylon, almost 17% are rated since January 1, which has earned it its highest price in just over two years.
Behind this good timing, analysts say, there are several factors. Above all, two. The first of these concerns expectations regarding the upcoming evolution of interest rates, a factor that until now weighed against them because they are very capital-intensive companies and demanding in terms of financing. The second is that they behave as a defensive sectorThus, in times of uncertainty about the future of economic growth, they are a highly sought-after option for investors.
“Over the past two years, the actions of the telecos “They behaved like a defensive sector, which was not happening before Covid, even in a more or less risky environment,” they say from Berenberg. “The fact that the Fed now assumes that it will cut rates has had an impact. fact that listed assets such as bonds [las torreras Cellnex e Inwit y Elisa] have joined the rally,” they add. “What happens in the coming months will be positive for the sector but we need an improvement in earnings estimates, especially if the period of economic uncertainty deepens,” they conclude.
Telefónica, among the most optimistic
In the sector, investors have clearly opted this year for traditional operators, heavily burdened in recent times by high rates and strong competition that should soon decrease with more business consolidation operations. Among the most bullish values in the sector in 2024 Swedish Tele2 and Telia stand outwith advances of 35 and 29% respectively. After these rebounds, both values found themselves without upward potential on the stock market.
The third most purchased “telephone” this year is also Nordic. In this case, it is Nokia, with a 25% rebound in full swing to be present in the race for chips needed to develop Artificial Intelligence. Despite this rebound, it is one of the listed companies with the lowest profit multiplier in the sector, with a PER (times the profit included in the share price) of 11.2 times.
One of the two Spanish companies present in this sector, Telefónica, is infiltrating it the fifth value with the biggest stock market gains in 2024 by scoring 21%. The company chaired by José María Álvarez-Pallete is listed on the June Summits of the order of 4.3 euros. However, this also left it no potential bullish on the stock market, according to the consensus of analysts gathered Bloomberg.
