Zacks Investment Research downgraded shares of France Telecom – ADS (FTE) from NEUTRAL to UNDERPERFORM on December 05, 2012, with a target price of $9.75.
We are downgrading our recommendation on France Telecom to Underperform from Neutral, following lackluster third quarter 2012 results. The company posted declining results for both earnings and adjusted EBITDA. Even revenue in France – the operator's largest market – dropped due to lower traditional telephone services. Looking ahead, we expect the shares of the company to remain under pressure owing to increased VAT rates, persistent unfavorable economic environment, poor fixed-line telephony business, lower mobile termination rates and strict regulatory measures across key European markets. Thus, the absence of any near-term strong driving catalyst compels us to have an apprehensive outlook on the company.
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