On Tuesday, UBS analyst Polo Tang adjusted the investment firm’s stance on freenet AG, listed as FNTN:GR on the Frankfurt Stock Exchange and OTC: FRTAF, upgrading the stock from Neutral to Buy. The new price target is set at €29.00, an increase from the previous €25.00.
The upgrade comes as a response to freenet AG’s recent strategic moves, including the signing of long-term agreements with all three German mobile network operators. These deals, spanning 5 to 10 years, are anticipated to mitigate the risks that have previously affected UK mobile retailers. The collapse of Phones4U in 2014 and the challenges faced by Carphone Warehouse in 2020 serve as precedents for the kind of risks that freenet AG aims to avoid with these new contracts.
In addition to the secured network deals, freenet AG is experiencing robust growth with its Waipu TV service. The company is also expected to benefit significantly from upcoming regulatory shifts in the German cable TV sector. These factors have led UBS to anticipate a stable Mobile EBITDA for freenet AG, moving away from previous forecasts of a structural decline.
The revised outlook from UBS includes a 17% increase in the longer-term Free Cash Flow (FCF) projections for freenet AG. This financial adjustment reflects the firm’s more optimistic view of the company’s future performance in light of the recent developments.
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