Reiterating his bullish case for Philippine Long Distance Telephone Company (PHI), Zacks senior Pacific Rim telecom analyst Peter Chua, CFA explains why the future looks bright for the company:
'We reiterate our Buy recommendation for Philippine Long Distance Telephone (PLDT) Company. The company has maintained its position as the country's dominant telecommunications service provider by expanding its presence in all segments of the industry. PLDT also continues to generate substantial free cash flow. Furthermore, better-than-expected subscriber gains in the wireless phone and broadband Internet segments would sustain steady growth in the coming years.
'PLDT Company is trading at 14.6x our estimate for 2007 earnings, which represents a significant discount to the S&P 500 and most other telecom service providers in both developed countries and emerging markets. Although the uncertain political climate in the Philippines makes the stock riskier than most, this is partially offset by the company's dominant market position, improved financial position and high operating profit margins.
'Given the positive near-term outlook, we believe there is room for the valuation to improve. We are of the opinion that investing in the company's stocks at this juncture will prove to be a very wise business decision. Our $75.00 target price is based on a forward P/E of 15.0x 2008 earnings.'
Read the full analyst report on PHI
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