TIM S.p.A., (IT:TIT), formerly called Telecom Italia, received a rating upgrade from BofA Global Research, indicating growth prospects for the stock. BofA’s rating upgrade from Buy to Hold comes as the company approaches its capital markets day, slated for March 7, 2024. TIT stock rose 6% following the rating upgrade on Monday but was trading down by 1.6% at the time of writing today.
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Based in Italy, TIM provides fixed-line and mobile telephone as well as data transmission services in Italy and internationally.
BofA’s Bullish View
Analysts at BofA are bullish on TIM’s sale of its fixed-line network to U.S.-based fund, KKR & Co. (NYSE:KKR). The company aims to finalize the sale by the middle of this year and anticipates no antitrust concerns. The deal, valued at €22 billion, will help reduce the company’s huge debt pile.
BofA pointed out the sale as “game-changing” and is betting big on the “new and improved” company. Analysts anticipate TIM’s remaining business to yield €14 billion in revenue, with EBITDAaL (earnings before interest, tax, depreciation, and amortisation after lease costs) estimated at €3.5 billion, and free cash flow projected at €900 million. Analysts expect TIM’s net debt to be maintained at under 2 times EBITDAaL.
Analysts also expect the company to resume its dividends at a “high-single-digit” yield. BofA anticipates an ordinary dividend of 1.75 euro cents per share, based on a payout ratio of roughly 2/3 of the distributable cash.
What is the Stock Price Forecast for Telecom Italia?
As per the consensus rating on TipRanks, TIT stock has a Hold consensus rating. The TIM share price forecast is €0.35, which is 21% higher than the current level.
