Zacks Investment Research upgraded shares of Orange (ORAN) from UNDERPERFORM to NEUTRAL on August 14, 2013, with a target price of $11.00.
We are upgrading our recommendation on Orange from Underperform to Neutral based on its long-term potentials that will largely offset headwinds arising from its weak European operations and declining fixed line operations. Although the company's top-line results continued to regress, primarily due to market conditions in France and Poland, it witnessed an improvement in Spain revenues on growth in fixed broadband and mobile revenues. Over the long term, we foresee Orange to largely benefit from growth in mobile data business, driven by LTE (Long-Term Evolution) network expansions. Moreover, Orange is driving substantial growth across Africa and the Middle East, which contributes nearly one-third of its total customer base. However, the company was forced to cut down on pricing gain to remain competitive, which we believe is detrimental for its margin growth.
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