VEON - VEON: Strong Upside Potential Once Overhead Resistance Is Taken Out

2024-02-06 06:42:02 ET

Summary

• VEON's encouraging forward-looking fundamentals include strong sales growth and margin gains from effective cost management and operating leverage.
• The company's balance sheet has been strengthened through the sale of Russian assets and reduced debt, leading to elevated levels of free cash flow.
• VEON's sales metrics are attractive, with a low trailing sales multiple and a long runway for growth in its 4G-led multiplay strategy.

Intro

We wrote about VEON Ltd. (VEON) in June of last year when we downgraded our rating in the stock from a Buy to a Hold employing a technical analysis piece. Although our initial Buy rating in November of 2022 was the right call (shares were trading at $11.63 at the time) pointing to strong upside at the time, the subsequent downgrade in June of 2023 (the stock was trading at $19.74 per share) was also the right call as shares have only managed to increase by approximately 2.2% since that commentary. Although encouraging trends (regarding VEON's pivot to an asset-light model) were witnessed once more in June of last year, the stock's technicals pointed to sustained consolidation and that is what has essentially played itself out in the stock over the past 7+ months. As we see below, shares look primed to test the $21 level (approx) once more in due course. Therefore, let's review VEON's recent fundamental trends to see if the international digital operator can break through on its next upside attempt....

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