Telefonica: Lowering Price Target After Q1'25 (Rating Downgrade)

2025-05-16 11:16:23 ET

Summary

• I've exited my Telefonica position after years of solid returns, as the stock nears my $5/share price target and upside looks limited.
• Despite decent 1Q25 results and strong brands like VIVO and O2, organic revenue and B2C sales are showing negative trends.
• While Telefonica is meeting its own 2025 targets, negative free cash flow and rising churn in core markets concern me.
• I now see better investment opportunities elsewhere and am lowering my conservative price target for Telefonica accordingly.

Dear readers/followers,

I've been investing in Telcos like Telefonica ( TEF ) for a number of years. And while Telefonica has probably been one of my riskier investments, it has nonetheless been a good one, with positive RoR and, as of the latest article and returns, over 30-40% RoR inclusive of dividends. Up until a few days ago, I held a decent-sized position in the company. However, as the company moved up to the $5/share price, currently at $4.82/share as I am writing this article, I kept looking at the comparative upside and potential of the company....

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