Zacks Investment Research upgraded shares of France Telecom – ADS (FTE) from UNDERPERFORM to NEUTRAL on May 24, 2012, with a target price of $14.00.
We are upgrading our recommendation to Neutral on France Telecom following the first quarter results. The company reported flat year-over-year revenues in the first quarter owing to recovery in C te d'Ivoire and Egypt. France Telecom is progressing well on its Conquests 2015 plan that will reinvigorate growth and restore profitability in the business. Strengthening domestic footprint and services as well as expansion into emerging markets are also fueling the company's growth story. Further, a strong balance sheet and a healthy dividend payout will bode well for future growth. Nevertheless, higher VAT rates, persistently weak domestic economic conditions, labor concerns, lower mobile termination rates and unfavorable regulatory measures across its key European markets might restrict the upside potential of the stock.
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