After updating the historical lows, Telecom Italia tries to rise again

Telecom Italia’s data for the first half of 2022 were double-sided. On the one hand, revenues and EBITDA were better than analysts’ consensus. On the other hand, the half-year ended with a loss with debt increasing.

The CEO of Telecom Italia took care of the title, confirming the interest in a single network which could be the best scenario for all the parties involved. Furthermore, the management of the group believes that it has sufficient liquidity to deal with the transaction.

Here, therefore, that after updating the historical lows, Telecom Italia tries to get up again. The next few weeks will be decisive in this regard.

After updating the historical lows, Telecom Italia tries to rise again

The title Telecom (MIL: TIT) closed the session on 5 August with an increase of 1.85% compared to the previous session at 0.22 euros.

Weekly time frame: the indications of the graphic analysis

The current trend is bearish and is shown in the figure by the solid line. At present, the prices are directed towards the most probable target in the area of ​​€ 0.189.

If, on the other hand, we consider the recent historical low in the 0.2015 euro area as a starting point, we can develop the bullish projection shown in the figure by the dotted line.

For the rise to take hold, however, it is of fundamental importance that there is a weekly close above 0.2222 euros. In this case, the doors could be opened to reach the most probable target in the 0.26 euro area. Subsequently, then, the subsequent objectives could be placed in the area of ​​€ 0.3099 and € 0.3641.

The valuation of the Telecom Italia stock

Analyzing the valuation of the stock on the basis of market multiples, as reported in the specialized magazines, we discover that it is underestimated whatever the approach used. For example, considering the relationship between price and turnover, we note that Telecom has a rating of 0.3, much lower than the average of its reference sector 4.8. In this case, the undervaluation relative to the reference sector is over 90%. However, it should be noted that 0.3 is an absolute low level and not only compared to competitors. A similar result is obtained by considering the Price to Book ratio.

According to the fair value, calculated with the discounted cash flow method, the undervaluation is around 70%.

If, then, the growth prospects of both the stock and the reference sector are considered, the undervaluation, according to what is reported in the specialized magazines, is higher than 80%.

According to what is reported in the specialized magazines, for the analysts who cover Telecom Italia the average rating is rack up with an average target price that expresses an undervaluation of approximately 33% compared to current prices. What is striking, however, is the strong difference between the most optimistic and the most pessimistic scenarios. In the first case, Telecom Italia shares are undervalued by 150%, while in the second, the overvaluation is 31%.

Recommended reading

The Ftse Mib Future snaps up, leaving the downside behind

The results of the forecasts in this article are based on statistical calculations explained in the ebooks published by ProiezionidiBorsa and processed on the basis of the available price history. (We also remind you to carefully read the warnings regarding this article and the author’s responsibilities, which can be consulted HERE”)

Leave a Comment