Emmet Kelly, an analyst from Morgan Stanley, maintained the Hold rating on Royal KPN NV. The associated price target remains the same with €4.00.
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Emmet Kelly has given his Hold rating due to a combination of factors surrounding Royal KPN NV’s strategic and financial outlook. The company has made significant progress in its ‘Connect, Activate & Grow’ strategy, particularly in areas such as dividend per share (DPS) growth, cost reductions, and long-term free cash flow (FCF) generation. Despite these positive developments, the company’s primary financial targets remain unchanged, aiming for moderate growth in service revenues, EBITDAaL, and FCF over the next few years.
While KPN’s cost-cutting measures are promising, with plans to achieve substantial operational expense savings annually until 2030, the focus on connecting and activating homes rather than expanding its footprint suggests a conservative approach. Additionally, the anticipated decline in capital expenditures and the attractive projected dividend yield by 2027 are positive indicators. However, the unchanged FCF forecasts and the emphasis on share buybacks highlight potential areas of concern. These mixed signals contribute to the Hold rating, as the stock’s potential upside appears limited in the near term.
In another report released on November 3, Barclays also maintained a Hold rating on the stock with a €4.75 price target.